Delhi planning stricter rules, higher tariffs on China goods

NEW DELHI • India plans to impose stringent quality-control measures and higher tariffs on imports from China, people with knowledge of the matter said, as a military stand-off between the neighbours threatens economic ties.

The state-run Bureau of Indian Standards is finalising tougher norms for at least 370 products to ensure items that can be locally produced are not imported, those people said, asking not to be identified, citing rules. The products include chemicals, steel, electronics, paper, fertiliser and plastic toys.

Discussions are also on to raise import duty on products including furniture, compressors for air-conditioners and auto components, they said. The proposal is being evaluated by the Finance Ministry.

The Trade Ministry is separately evaluating non-tariff measures to check Chinese imports in a manner that conforms with World Trade Organisation rules. Such measures would include more inspections and enhanced quality certification requirements, those people said.

The move comes at a time when India is staring at its first contraction in more than four decades. The International Monetary Fund has forecast that the country's gross domestic product will decline 4.5 per cent in the fiscal year to March next year.

"If India were to raise barriers to imports from China by means such as higher tariffs, Indian people and companies end up paying more for consumer, capital and intermediate goods," said Mr Louis Kuijs, head of Asia economics at Oxford Economics Hong Kong.

China is India's biggest source of imports, with purchases running into almost US$70 billion (S$97 billion) last year. Beijing enjoys a trade surplus of about US$50 billion with New Delhi.

The need for import substitution started after disruptions to raw material supplies from China in the wake of the coronavirus pandemic.

A deadly clash between soldiers from both countries along a contested Himalayan border this month added to calls for the process to be expedited.

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A version of this article appeared in the print edition of The Straits Times on June 26, 2020, with the headline 'Delhi planning stricter rules, higher tariffs on China goods'. Subscribe