TOWARDS SELF-RELIANCE

Recently, we heard from our forwarder that one of our containers was held up following the scrutiny on containers from China. The quantum in question was in excess of 4000T at Bangalore ICD. We could not verify this information, but on the other hand it certainly made us wonder about the quantum of Indian imports from China and the dependency that it creates.

China accounts for a sizable portion of India’s top imports, especially where intermediate products or components and raw materials are concerned. Banning the imports of raw materials from China without which products over here cannot be manufactured will make things difficult and expensive.

There are strategic and key raw materials that India imports from China due to which Indian exports of finished goods are more competitive.

China accounts for 80 percent of raw materials for making medicines, lifesaving antibiotics in India. The country, with its rich natural resources, has certain essential and critical raw materials in abundance e.g. rare earth products, natural graphite, tungsten, and magnesium. Hence, India and the world will continue to depend on China for these essential raw materials.

Raising manufacturing standards

Today, world economies are interconnected. Globalization process has evolved over a period of time for obvious reasons and benefits.

China is Asia’s largest economy, one of the India’s leading trade partner and the third largest destination for Indian shipments. Given Chinese businesses were slowly opening up even as India and other countries were under lockdown, the neighboring country could cater to a lot of cross-border trade. The latest improvement in India’s export can also be partly attributed to the increased demand from China.

Decoupling of economies will evolve over time and the blanket ban is not the way to drive that shift!

The Covid-19 situation has certainly offered excellent opportunity for India to accelerate localization efforts to reduce reliance on imports. However, in the first place, Indian companies need to achieve world-class manufacturing standards through high quality, low cost, fast delivery to compete on merits (raw materials to finished goods). This will then help to gradually reduce reliance on Chinese imports, else we would only be hurting ourselves by putting restrictions and blanket ban.

As of now, in many sectors, we are heavily dependent for raw materials or semi-finished goods from China. It’s about time we break free of this dependence and work towards becoming self-reliant. Indians have engineering as well as financial capability to cope with challenges and cater to diverse demands.

The recent Covid-19 situation reflects on our ability to take charge and manufacture PPE kits or ventilators etc. The Government is aggressive on being ‘Atmanirbhar Bharat’ and I see a huge opportunity for the Indian Industry to accept the challenge and prove its mettle. Associations like IMTMA are highly instrumental as a medium between the machine tool manufacturers and the Government policy makers.

The key raw materials for the machine tools industry, such as, ferrous and non-ferrous metals, particularly steel and aluminum, are available in abundance in India. In addition, we require high-quality, complex castings for which India has a well-established foundry industry to support the sector.

Hence, in my view, the machine tool industry has no dependence on the Chinese imports, particularly, the raw materials.

Ban not needed

It is impossible to place a blanket ban on the import of Chinese goods. The government of India should place curbs if there are quality issues or if the imports are subsidised or dumped. Here again, the machine tool industry’s exports would not be affected by the curbs placed on Chinese imports.

Like many other countries, we too are dependent on China and are importing from the country because the materials are cheaper. Otherwise, we could have imported from other countries or sources. In a globalized world, we have to look for optimum options or internally develop the resources.

Looking at the present sentiment, we can experiment developing the alternatives internally or look for other countries for sourcing. This is the perfect time for that because the people of India want to reduce their dependence on the Chinese imports. Since we cannot stop the imports immediately or completely, we have to do it in a phased manner.

Indian exports to be affected

You cannot ban anything from any country completely. If we do that, it will surely affect our exports because of the price increase and we may end up not being competitive in our exports.

China’s exports to India may be a small share compared to their global exports, so they may not be hit but we will be affected, so we have to reduce the dependency in a planned and gradual manner.

Instead of banning any imports from China or any country we must take this problem as an opportunity and challenge the situation and come up as a winner. This needs lot of planning, hard work, major infrastructure boost and advancement in technology.