India has potential to reduce imports from China by 40%: PHD Chamber

James Good Corporate

According to an analysis conducted by industry body PHD Chamber of Commerce and Industry, India holds the immense potential to reduce 40% imports (around USD35 billion) from China in the coming times as there are various product categories in which India also produces but at the lower volume said Shri Pradeep Multani, President, PHD Chamber of Commerce and Industry in a press statement issued here today.

The PHDCCI report on ‘Prospects and Potential for Enhancing Exports and Reducing Imports of India’, (attached) pertains to the comparative analysis of bilateral trade with the largest importer and exporters of India i.e. China and USA, said Shri Pradeep Multani.

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, said Shri Pradeep Multani.

In recent years imports from China have increased significantly except the Pandemic year, India has imported around USD 87 billion in the year 2021 wherein the top  10 import product categories comprise around USD 54 billion, said Shri Pradeep Multani.

Imports from China have changed from low-value, low-cost products like toys and crackers to high-value items like electronics, he said.

Unfair competition from imports from China had a severe impact on the growth prospects of domestic manufacturers, especially small businesses, he said.

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, said Shri Pradeep Multani.

Enhanced production in these sectors will not only reduce imports from China but also boost India’s exports in such product categories, said Shri Pradeep Multani.

There are approximately 36 sub-sectors that can reduce India’s dependence on Chinese imports. These sectors collectively account for around USD35 billion in India’s imports, he said.

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 Shri Pradeep 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 USD26 billion in India’s imports from China, Whereas, Active Pharmaceutical Ingredients, Machinery and components, plastics, and fertilizers are collectively contributing around USD 30 billion and can be the major exports, said Shri Pradeep 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 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 industry production processes, said President, Shri Pradeep Multani.

Annexure : 36 sub-sectors for reducing imports and enhancing exports

S.No HS Code 4 Digit Description Value in USD billion % Share in Total Imports from China % Share in Total Imports from World
1 8517 Telephone sets, incl. telephones for cellular networks or for other wireless networks; other … 6.6 7.5 1.2
2 8471 Automatic data-processing machines and units thereof; magnetic or optical readers, machines … 6.2 7.1 1.1
3 8542 Electronic integrated circuits; parts thereof 4.5 5.2 0.8
4 8541 Diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, … 3.9 4.4 0.7
5 8529 Parts suitable for use solely or principally with transmission and reception apparatus for … 2.2 2.6 0.4
6 2933 Heterocyclic compounds with nitrogen hetero-atom[s] only 1.8 2.0 0.3
7 3102 Mineral or chemical nitrogenous fertilisers (excluding those in pellet or similar forms, or … 1.5 1.7 0.3
8 2941 Antibiotics 1.4 1.6 0.2
9 8504 Electrical transformers, static converters, e.g. rectifiers, and inductors; parts thereof 1.3 1.5 0.2
10 8507 Electric accumulators, incl. separators, therefore, whether or not square or rectangular; parts … 1.2 1.4 0.2
11 3105 Mineral or chemical fertilizers containing two or three of the fertilizing elements nitrogen, … 1.2 1.4 0.2
12 8414 Air or vacuum pumps (excluding gas compound elevators and pneumatic elevators and conveyors); … 1.1 1.2 0.2
13 8708 Parts and accessories for tractors, motor vehicles for the transport of ten or more persons, … 1.0 1.2 0.2
14 3808 Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant-growth … 0.9 1.1 0.2
15 2915 Saturated acyclic monocarboxylic acids and their anhydrides, halides, peroxides, and peroxyacids; … 0.8 0.9 0.1
16 2916 Unsaturated acyclic monocarboxylic acids, cyclic monocarboxylic acids, their anhydrides, halides, … 0.8 0.9 0.1
17 8473 Parts and accessories (other than covers, carrying cases and the like) are suitable for use solely … 0.8 0.9 0.1
18 8518 Microphones and stands therefore (excluding cordless microphones with built-in transmitter); … 0.7 0.8 0.1
19 2922 Oxygen-function amino-compounds 0.7 0.8 0.1
20 2917 Polycarboxylic acids, their anhydrides, halides, peroxides, and peroxyacids; their halogenated, … 0.7 0.8 0.1
21 8479 Machines and mechanical appliances having individual functions, not specified or included elsewhere … 0.7 0.8 0.1
22 3920 Plates, sheets, film, foil, and strip, of non-cellular plastics, not reinforced, laminated, … 0.6 0.7 0.1
23 8431 Parts suitable for use solely or principally with the machinery of heading 8425 to 8430, n.e.s. 0.6 0.7 0.1
24 8525 Transmission apparatus for radio-broadcasting or television, whether or not incorporating reception … 0.6 0.7 0.1
25 2921 Amine-function compounds 0.6 0.6 0.1
26 2934 Nucleic acids and their salts, whether or not chemically defined; heterocyclic compounds (excluding … 0.6 0.6 0.1
27 8482 Ball or roller bearings (excluding steel balls of heading 7326); parts thereof 0.6 0.6 0.1
28 3206 Inorganic or mineral colouring matter, n.e.s.; preparations based on inorganic or mineral colouring … 0.5 0.6 0.1
29 5402 Synthetic filament yarn, incl. synthetic monofilaments of < 67 decitex (excluding sewing thread … 0.5 0.6 0.1
30 8501 Electric motors and generators (excluding generating sets) 0.5 0.6 0.1
31 3904 Polymers of vinyl chloride or of other halogenated olefins, in primary forms 0.5 0.6 0.1
32 8483 Transmission shafts, incl. camshafts and crankshafts, and cranks; bearing housings and plain … 0.5 0.6 0.1
33 9019 Mechano-therapy appliances; massage apparatus; psychological aptitude-testing apparatus; ozone … 0.5 0.6 0.1
34 8714 Parts and accessories for motorcycles and bicycles and for carriages for disabled persons, … 0.5 0.6 0.1
35 8536 Electrical apparatus for switching or protecting electrical circuits, or for making connections … 0.5 0.6 0.1
36 9018 Instruments and appliances used in medical, surgical, dental, or veterinary sciences, incl. … 0.5 0.5 0.1

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