More measures likely to stop China from re-routing goods into India

India is looking at ways to restrict inward shipment of goods from China which are being re-routed through other countries such as Singapore and Malaysia with which New Delhi has trade agreements. Experts have suggested that India must make it mandatory for companies that are supplying goods to India to disclose their ownership pattern in detail.

New Delhi has already imposed stringent measures including the ‘rule of origin’, which implies that all global suppliers of goods will have to mention the country of origin to restrict cheap imports from other countries including China. However, authorities said that there is “enough evidence” to suggest that the dragon nation has conveniently circumvented the rule book. Based on the country of origin, goods either attract tariff concessions or duties.

Sample this. Chinese manufacturer Xinyi Glass is one of Malaysia’s largest flat glass producers, which is also into exporting to other countries. It also has a plant in Canada. The Malaysia plant has a total installed capacity of 3,200 tonnes per day. Industry experts said that Malaysia’s requirement a day is about 400 tonnes.

According to Glass Worldwide Official Journal, Malaysia exported $240.2 million worth of flat glass products in 2018—a jump of 149.7 per cent over the previous year.

https://www.glassworldwide.co.uk/sites/default/files/afgm-articles/Malaysia.pdf

Kibing Glass Malaysia, also a Chinese company, has set up manufacturing facilities in the southeast Asian country.

While New Delhi’s imports of glass products increased—Malaysia being one of the countries which exported to India—domestic manufacturers have been complaining of oversupply. This is severely hurting glass manufacturers.

“Xinyi Glass began investing in Malaysia in 2014. Its phase-I project, which started commercial production in May 2017, included a 1200 tonnes/day line for float glass at Malacca,” the journal said.

India and Malaysia signed the Comprehensive Economic Cooperation Agreement (CECA) in 2011.

Imports from Hong Kong, especially for electric and electronic items, too have been steadily increasing.

“We need to have a well thought-out mechanism to curb dumping. We must boost our manufacturers. Due to lopsided trade policies of the past, the manufacturing sector has been systematically destroyed,” Swadeshi Jagran Manch national co-convener Ashwani Mahajan said, adding that Make in India and Atmanirbhar Bharat must be the thrusts to generate jobs and become self-reliant.

Nirupama Soundararajan, senior fellow and head of research, Pahle India Foundation, said that it is critical for India to reduce its dependence on China. “Indian manufacturers have the required capability but due to the cost factor—imports from China are cheaper—the manufacturing sector has suffered,” Soundararajan said.

She underlined the need for bringing in measures which will strop indirect trade between India and China.

It is no secret that finished imported goods are priced less compared to those made in India due to the skewed trade agreements. Most experts have acknowledged that the free trade agreements have not benefited India and that they need to be revisited.

Even before the government put in place stringent measures to restrict imports from China, the dragon had started using other countries such as Singapore and Malaysia besides Hong Kong to ship goods into India..