India has an easy way out, every time the trade deficit with China pertaining to a particular product seems excessively high, the South Asian nation imposes a duty to maintain the balance of trade. The trade barrier, often disguised as a bid to protect the ailing domestic industry and keep fake Chinese goods out, has once again been extended on four Chinese products including silk and a sweetener. It is already imposed on iron ore, China’s largest import from India and power equipment, of which the latter is in dire need.
Import of certain type of silk fabrics from China will attract anti-dumping duty of US$1.82 to US$7.59 per metre, a notification of the Revenue Department said. The duty was first imposed on the fabrics in December 2006 till December 2011. Five years ago, raw silk from China used to cost Rs. 1,400 a kg; now it costs Rs. 2,299 a kg—a result of the mismatch between demand and supply of silk yarn in terms of quantity and quality. India had a trade deficit of USD 16 billion against China during 2010-11. It has already crossed US$20 billion in the first seven months of the current fiscal.
When it comes to India matching China this is where the country lags behind. As in iron ore, so in silk, the raw material that India produces cannot be processed on the machines that the nation has. In iron ore, the filaments are of poor quality and only once they are processed in China are they imported into India and can be made into steel, similarly the quality of Indian silk has deteriorated and isn’t of uniform thickness, which means it cannot be used on a power-loom, a mechanization most silk weavers have moved to. This means that raw silk from India cannot necessarily be processed in India, however China makes life easier for the Indian weavers as it takes the low quality, uneven silk and reels it into a uniform quality using automatic machines which can then be used in Indian power looms. Therefore, exporting back to India, the raw material from where it began. If only Indian weavers and farmers could work together, to bridge this gap between the raw material and the process used to create the final product, could the nation be independently sustainable and not have to create barriers to trade, which inadvertently have repercussions.
The notification from the revenue department further said the duty on import of certain type of nylon filament yarn from China, Chinese Taipei, Malaysia, Thailand and Korea will be imposed at US$0.20 to US$1.51 per kilogram for another five years.
Notifications for extension of anti-dumping duty on imports of cellophane transparent film and saccharin from China for five years have also been issued. Saccharin is a non-nutritive sweetener and considered to be low-calorie substitute for cane sugar.
Meanwhile, the government has also levied provisional anti-dumping duty on import of phosphoric acid (excluding agriculture /fertiliser grade) from Israel and Taiwan. The duty at US$116.25 to US$260.26 per tonne has been imposed for six months.
India has so far initiated about 150 anti-dumping cases against China, which account for over half of such actions taken by the country against foreign nations.