Import barriers self-defeating, denies benefit of goods at international prices to consumers: Brickwork

The rating agency noted that there had been a steady creeping in of a protectionist stance in the government over the last three years. Pandemic and stand-off with China have added to the chorus.
Indo-China

Parmita Uniyal

Amid moves to contain imports of various items such as air-conditioners (ACs), TVs and tyres, presumably aimed at China, Brickwork Ratings has warned the government against restricting imports saying the protectionist stance had proved self-defeating in the past.

In a report, the rating agency noted that there had been a steady creeping in of a protectionist stance in the government over the last three years. Pandemic and stand-off with China have added to the chorus.

“This is self-defeating, as the country’s history has shown. Denying the benefit of goods at international prices to consumers to protect producers has only helped them to not be competitive and ask for more protection. We hope the government reverses the trend quickly and makes the economy export-oriented,” Brickworks said in its 16-page report.

The Modi government has taken a slew of measures in the past one year for import substitution across various sector. While it has encouraged sowing of oil seeds and pulses to cut imports in the agriculture sector, several tariff and non-tariff measures have been taken to slash imports of consumer items such as toys, televisions, agarbattis, tyres and electronic goods.

While the measures are aimed at promoting local manufacturing, a section of economists and public policy experts have termed them protectionist and inward-looking which will hurt general public as they would not be able to get products at competitive prices. The government has countered this saying the whole objective of the recent trade policies is to make India self-reliant and global hub for exports.

Ever since Coronavirus pandemic broke out, there has been emphasis on cutting ‘non-essential’ imports from China. While traders have welcomed the government stance, various small manufacturers have complained of rise in raw material cost.

“There are several items which are manufactured only in China. In cases where few other countries also produce, it still makes sense to import from China as prices are 10-20% cheaper,” said a chemical manufacturer.
The clutch of measures to cut imports from China has, however, brought desired outcome in the last few months. India’s imports from China fell 27.63% during April-August this fiscal to $21.58 billion over the same period previous year.

As per a reply in Parliament by Commerce Minister Piyush Goyal, the value of imports from China stood at $4.98 billion in August and $5.58 in July.

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