Lok Sabha Question No. 1253 (UNSTARRED), answered on 2022-12-14
Subject: Trade with China
Ministry: COMMERCE AND INDUSTRY
Asked by: Vincent H Pala, A. Chellakumar, Behanan Benny

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY (DEPARTMENT OF COMMERCE)

## LOK SABHA UNSTARRED QUESTION NO. 1253 TO BE ANSWERED ON 14 th  DECEMBER, 2022

## TRADE WITH CHINA

## 1253.   SHRI VINCENT H. PALA: DR. A. CHELLAKUMAR: SHRI BENNY BEHANAN:

Will the Minister of COMMERCE & INDUSTRY ( वाणिज्य एवं उद्योग मंत्री ) be pleased to state:

- (a) whether  China  is  one  of  the  India's  largest  trade  partners,  if  so,  the  value  of goods traded with China and the details of imports and exports, year- wise from 2014 till date;
- (b) the details of India's trade deficit with China, year-wise from 2014 till date;
- (c) the  reasons  for  India's  increasing  reliance  on  Chinese  imports  for  capital  and intermediate goods;
- (d) the  reasons  why  India  remains  dependent  on  Chinese  imports  for  chemicals  and electronics despite Production Linked Incentive (PLI) schemes for the same;
- (e) the reasons why the PLI schemes meant to reduce India's dependency on China have failed to achieve its objectives; and
- (f) whether the Government is taking any other initiatives to reduce trade dependency on China, and if so, the details thereof and if not, the reasons therefor?

## ANSWER

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THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE AND INDUSTRY (SMT. ANUPRIYA PATEL)

(a): No, Sir. The largest merchandise trading partner of India in 2021-22 was United States of America.

## (b): The trade deficit with China since FY 2014-15 is as follows:

## *(P) is for provisional

The trade deficit with China in 2004-05 was USD 1.48 billion, which increased to USD 36.21 billion in 2013-14, an increase of 2346%. Against this massive increase, the trade deficit with China has since increased by only about 100% to USD 73.31 billion in 2021-22from USD 36.21 billion in 2013-14.

(c): Most of the goods imported from China are capital goods, intermediate goods and raw materials and are used for meeting the demand of fast expanding sectors like electronics, telecom and  power  in  India.  The  rise  in  import  of  electronic  components,  computer  hardware  and peripherals, telephone components, etc. can be attributed to transforming of India into a digitally empowered  society  and  a  knowledge  economy.    India's  dependence  on  imports  in  these categories is largely due to the gap between domestic supply and demand.

(d): The  raw  materials  in  the  form  of  Active  Pharmaceutical  Ingredients  (APIs)  and  drug formulations  imported  from  China  are  used  for  making  finished  products  (generic  medicines) which are also  exported  out  of  India.  The  electronic  components  such  as  mobile  phone  parts, integrated  circuits,  video  recording  or  reproducing  apparatus  etc  are  used  for  making  finished products  (e.g.  mobile  handsets)  which  are  also  exported  to  other  countries.    The  Production Linked  Incentive  Scheme  (PLI)  in  API/Bulk  Drugs/Key  Starting  Materials  and  Large-Scale Electronics Manufacturing have been launched by the Government recently and these schemes will reduce dependency on imports and make India a competitive destination for drugs/electronics manufacturing and create more domestic champions apart from giving boost to Atmanirbhar Bharat.

(e)  &  (f):    Though  the  PLI  schemes  have  been  launched  recently,  they  have  started  showing results and some examples are enumerated below:

(Values in USD billion)

| FY            |   2014-15 |   2015- 16 |   2016- 17 |   2017- 18 |   2018- 19 |   2019- 20 |   2020- 21 |   2021- 22 |   2022-23 (Apr- Oct) (P) |
|---------------|-----------|------------|------------|------------|------------|------------|------------|------------|--------------------------|
| Export        |     11.93 |       9.01 |      10.17 |      13.33 |      16.75 |      16.61 |      21.18 |      21.26 |                     8.77 |
| Import        |     60.41 |      61.7  |      61.28 |      76.38 |      70.31 |      65.26 |      65.21 |      94.57 |                    60.27 |
| Total trade   |     72.34 |      70.71 |      71.45 |      89.71 |      87.06 |      81.87 |      86.39 |     115.83 |                    69.04 |
| Trade Deficit |     48.48 |      52.69 |      51.11 |      63.05 |      53.56 |      48.65 |      44.03 |      73.31 |                    51.5  |

(Source: DGCIS)

(i) The  PLI  Scheme  for Large Scale Electronics Manufacturing  has attracted large investments  from  global  and  domestic  companies  manufacturing  mobile  phones  and  specified electronic components.  The production as well as exports of mobile phones have increased. The imports of mobile handsets have decreased from Rs 48,609 crore in FY 2014-15 to around Rs 11,209 crore in FY 2021-22 whereas the Mobile phone exports from India touched the USD 1 billion mark (over ₹8,200 crore) for the first time ever in the month of September 2022 . In FY 2022-23,  mobile  phone  exports  have  increased  to  more  than  USD  5  billion  till  October  2022 against USD 2.2 billion in 2021-22 during the same period.

(ii) Under PLI for Active Pharmaceutical Ingredients API, a total of 51 applicants have been approved with a committed  investment of  Rs.4138.41 crore and expected  employment generation of around 10,598 persons. Industry has responded well and the actual investment up to September 2022 is Rs.1707.37 crore

(iii) Under PLI Scheme for 'Medical Devices', total 21 applicants have been approved, with a total committed investment of Rs. 1058.97 crore.

(iv) Under PLI for Pharmaceuticals, 55 applications have been approved with total committed expenditure of Rs.17,425 crore and actual investment up to September 2022 is Rs.15,164 crore with 261 manufacturing location commissioned.

(v) Under PLI for  Telecom  and Networking Products, amendments were made in the PLI Scheme  Guidelines  with  effect  from  01-04-2022,to  enhance  the  scope  of  the  scheme,  and  to facilitate  Design-led  manufacturing  for 5G  products. Approval  has  been  granted  to 42 companies, with committed investment of Rs. 4,115 crores over the scheme period. For Telecom and  Networking  products,  as  on  30-09-2022,  there  is  sale  of  Rs.14,735  crores  with  export  of Rs.8,063 Crores since 01-04-2021.

(vi) Under PLI scheme for High efficiency Solar PV modules, under tranche 1 of scheme, letter of awards has been issued to 3 successful bidders in Nov./Dec 2021 for setting up 8.737 GW  capacity  of  fully  integrated  solar  PV  module  manufacturing  units.  The  manufacturing capacity is scheduled for commissioning around end of 2024.

The Government has taken various other steps to support and expand domestic capacities such as Make in India, Start Up India, Promoting Ease of doing Business, reducing compliance burden, PM Gati Shakti National Master Plan etc.

Other measures taken by Government include framing of Technical Regulations (TRs) for several  products  for  maintenance  of  standards/quality  of  imported  products.  Further,  the Directorate  General  of  Trade  Remedies  (DGTR)  is  empowered  to  recommend  restrictions  on import of a product by imposition of additional duty or quantitative restrictions (QRs) if Indian industry is 'seriously injured' or 'threatened with injury' on account of surge in imports or unfair

trade practices.  Currently, 53 Anti-dumping measures and 4 Countervailing Duty measures are in force on Chinese products on account of unfair trade practices.

The  Government  has  also  notified  'Electronics  and  Information  Technology  Goods (Requirement of Compulsory Registration) order 2021 for curbing import of sub-standard and unsafe  electronic  goods  into  India.    63  product  categories  have  been  notified  under  the Compulsory Registration Order. Similarly, for toys, the Government has issued Toys (Quality Control) Order, 2020 on 25 Feb 2020 through which toys have been brought under compulsory Bureau of  Indian  Standards  (BIS)  certification  with  effect  from  1  Jan  2021.  This  will  check import of substandard toys. In the chemicals and fertilizer sector, as on date 61 QCOs with 66 products have been notified making BIS certification mandatory.

The Government has amended General Financial Rules whereby in public procurements, the bidders having beneficial ownership from countries sharing land border with India will be eligible to bid only after registration with the Government.

The Government procurement portal i.e. Government e-Marketplace (GeM) has made it mandatory  for  sellers  to  mention  'country  of  origin'  on  products  they  wish  to  sell  through  the platform, a move aimed at promoting Atma Nirbhar Bharat (Self-reliant India).

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