Build a broader trade plan since Chinese traders are adept at overcoming barriers
In trade as in cricket, batting against a chinaman is about countering the unorthodox and deceptive. India has made a renewed effort to try and set up non-tariff barriers to floods of Chinese-manufactured goods. In the past India has been among the most active users of anti-dumping duties and other standard WTO-approved methods to stem the flow of Chinese imports. New Delhi has now turned to the use of technical and safety standards against the Made in China hordes. India’s China trade was responsible for half of its entire trade deficit of $106 billion, in 2016. More importantly, this shortfall has grown exponentially since 2006. This has been driven by two factors.
One is a rising Indian appetite for Chinese equipment. The Modi government has increased tariffs on electronic products and is using the new standards to encourage domestic manufacturers to enter these fields. There is minimal evidence this is working. The many constraints facing Indian factory-owners in the form of high taxation, greater logistics costs, more expensive power explain India’s inability to make its own phones and chips. The other reason are the hundreds of non-tariff barriers that Beijing places against Indian and other imports.
India’s present attempts to stem Chinese imports are unlikely to have much impact. Chinese firms are adept at overcoming such trade barriers. What New Delhi should be looking at is a more comprehensive trade strategy regarding Beijing. Potentially, if India were to cause enough problems for Chinese imports, Beijing might be prepared to negotiate some sort of bilateral trade understanding. More sensible would be to build a global coalition to push for China to become more transparent about its use of subsidies, do more to protect intellectual property and so on. Either or both of these responses requires a degree of trade diplomacy that has not been evident in the Modi government. It is time New Delhi try to acquire such skills.