New Delhi [India], August 18 (ANI): India has the potential to reduce imports from China by around 40 per cent in the coming years, according to an analysis conducted by industry body PHD Chamber of Commerce and Industry.
India holds the immense potential to reduce 40 per cent imports (around $35 billion) from China in the coming times as there are various product categories that India also produces but at a lower volume, Pradeep Multani, President, PHD Chamber of Commerce and Industry, said in the report.
The report titled 'Prospects and Potential for Enhancing Exports and Reducing Imports of India', presents a comparative analysis of bilateral trade with the largest importer and exporters of India i.e. China and the USA.
The recent dynamic schemes announced by the Government of India such as the PLI scheme and PM Gati Shakti schemes have enhanced the sentiments of the Indian producers to produce more at a competitive cost which will give considerable competition to China, Multani noted in the report.
In recent years imports from China have increased significantly except the Pandemic year. India imported around $87 billion worth of goods from China in the year 2021 wherein top 10 import product categories comprised around $54 billion.
Imports from China have changed from low-value, low-cost products like toys and crackers to high-value items like electronics, the report said.
Unfair competition from imports from China had a severe impact on the growth prospects of domestic manufacturers, especially small businesses.
According to the report, India has significant scope for producing more import substitution in the sectors including chemicals, automotive components, bicycle parts, agro-based items, handicrafts, drug formulations, cosmetics, consumer electronics, and leather-based goods among others.
Enhanced production in these sectors will not only reduce imports from China but also boost India's exports in such product categories, the report highlights.
There are approximately 36 sub-sectors that can reduce India's dependence on Chinese imports. These sectors collectively account for around $35 billion in India's imports.
"Since the domestic market has production capabilities; these sectors can readily minimize their dependence on China in a phased manner without any substantial extra investments," said Multani.
In the first phase, India may focus on the sectors that are included in the PLI scheme. The sectors such as electrical and electronic components comprise $26 billion in India's imports from China, Whereas, Active Pharmaceutical Ingredients, Machinery and components, plastics and fertilizers are collectively contributing around $30 billion and can be the major exports, suggested Multani.
In the second phase, labour-intensive sectors such as textiles, iron and steel, tanning, dyeing extracts, man-made filaments, furniture and lighting among others can also be considered for the import substitution and export promotion, he said.
Export promotion strategy for 36 sub-sectors would have a positive cascading effect on the economy through forward and backward linkages in the industrial production processes, he added. (ANI)