India may impose safeguard duties to bridge trade deficit with China: DIPP

Amid concerns over rising trade gap with China, the Department of Industrial Policy & Promotion (DIPP) has stated that India’s high trade deficit with China cannot be sustained over the long run and India could consider imposing 'some kind of safeguard duties' on Chinese imports to bridge this huge trade gap.

India’s trade deficit with China stood at about $36 billion during FY14 with exports around $15 billion against $51 billion imports. The DIPP is of the view that Chinese companies can manufacture the same product in India which they export and thus they should increase investment and set up manufacturing bases in the country. Chinese companies to make in India, find domestic partners and use India as an export base to America, and African countries. During the period April 2000 to July 2014, China has invested only $411 million which is only 0.18 percent of India's total FDI received in the reported period. 

To enhance the Chinese investments in the country, the government has given an in-principle approval to a memorandum of understanding (MoU) allowing China to set up industrial parks in the country. The industrial parks are expected to include special economic zones (SEZs) and manufacturing zones. At present, China is setting up two industrial parks in states include Maharashtra and Gujarat.

Further, India and China have set $100 billion target by 2015. However, India had already asked the Chinese government to provide more access to the market so that the target of $100 billion can be achieved in a more balanced manner. Better access of Chinese markets to domestic IT-enabled services, cotton textiles, home furnishings and pharmaceuticals could help India to reduce the imbalance in trade.