The government is considering import restrictions on more than 350 items, including electronic goods, toys, furniture, and textiles, by putting in place non-tariff barriers to support the domestic industry. Steps such as introducing an import-monitoring system for some and mandatory licensing requirements for others are being examined.
The move is in line with the “Atmanirbhar Bharat” objective, to cut import dependence, and encourage production and demand for locally made goods. Departments and ministries including finance; commerce; micro, small, and medium enterprises (MSMEs); and the NITI Aayog are working on a strategy to curtail such imports.
Besides, establishing rigorous product standards is being worked out by the Bureau of Indian Standards (BIS). Such imports are worth $127 billion. These come largely from China. Bilateral trade between China and India was worth $88 billion in FY19, with a deficit of $53.5 billion in China’s favour. “A large chunk of these originate in China and for those goods, we will pursue import substitution,” a senior official said. This will be done mainly by establishing product standards, for which the BIS has been given deadlines.
Items such as processed food, textiles, leather, toys, and furniture manufactured mainly by MSMEs are being considered for import restriction. Drugs and items like television, air-conditioners, and refrigerators are also on the list. Monitoring will require importers to register the volumes, values, and the country of origin. A similar mechanism called the Steel Import Monitoring System (SIMS) was introduced in 2019.
Widening the restricted list for imports is being considered. For this permission from the director general of foreign trade (DGFT) is required. The DGFT last month had notified moving imports of certain new pneumatic tyres of passenger vehicles, buses/lorries, and two-wheelers from the free list to the restricted list. India has hiked duties on over 3,500 tariff lines since 2014. The Department of Commerce has been hesitant to raise import duties, fearing higher prices will hurt manufacturers and exporters who rely on foreign inputs and are facing a liquidity crisis.
“Raising tariffs may not be a feasible option because higher prices will hurt manufacturers and exporters who rely on raw material imports and are facing a liquidity crisis. Besides, there are items on the ceilings bound by the World Trade Organization, and duties cannot be hiked further,” said a government official.
Inter-ministerial consultations after the Prime Minister’s Office directed framing separate sectoral policies to secure investment, find markets, and boost production capacities. Incentives for domestic manufacturing will be given for “champion sectors”, and discussions with business stakeholders to source from a broader range of countries will start. The Directorate General of Trade Remedies has been asked to step up investigation into China’s alleged dumping of products such as steel, chemicals, apparel, and low-value engineering goods.