What's New :
ITS 2025: Integrated Test Series & Mentorship Program for Prelims and Mains. Get Details
27th February 2024 (9 Topics)

Govt depts red-flag high duties to curb China imports


The Centre’s move to progressively hike customs duties, especially the more recent offensive targeted at imports of Chinese components and inputs, needs to be reviewed, as it can threaten the domestic economy. 

Brief Background

  • The blockade targeting Chinese imports gained traction across Central ministries and departments in the aftermath of the Galwan border clash since 2020.
  • China accounts for 14 per cent of India’s imports with not just inputs for the domestic industry in sectors ranging from electronics to pharmaceuticals and textiles to leather, but also capital goods, being sourced from China.

What is Protectionism?

Protectionist policies followed by India:

  • Aatmanirbhar Bharat
  • Increase in tariffs
  • Anti-Dumping duty
  • Food protectionism
  • Vaccine nationalization
  • Opting out from RCEP
  • Protectionism refers to government policies that limit international commerce in order to benefit home companies and stimulate domestic investment in a particular industry.
  • Protectionist policies are typically intended to boost domestic economic activity, but they can also be enacted to address safety or quality problems.
  • Tools of Protectionism: Tariffs, Quotas, Subsidies, Anti-dumping duties



  • More Growth Opportunities
  • Lower Imports
  • More Jobs
  • Higher GDP
  • Benefits for local producers
  • Restricting the trade flow
  • Stagnation in technological advancement
  • Limited choices for consumers
  • Inflationary effect
  • Economic isolation
  • Uncompetitive domestic industries
  • Against WTO norms

What are the impacts of such blockade?

  • Impact on important sectors: The blockade targeting Chinese imports is now seen to be impacting sectors such as electronics and pharmaceuticals.
  • Loss in domestic output: The roadblocks to imports in these sectors is leading to a loss of domestic output.
  • Restriction on necessary input material: To check cheap quality imports from China, India imposed Quality Control Orders (QCOs) that restrict MSMEs from getting necessary input material.
  • Loss of competitive advantage: It is leading to a loss of competitive advantage for Indian manufacturing.
    • Uncompetitive atmosphere: The average tariffs in India have jumped to 18.1 per cent in 2022 from 13 per cent eight years ago in 2014, has made India uncompetitive vis-a-vis countries such as Vietnam, Thailand and Mexico.
  • Threatened supply chain: India’s high tariffs pose a disincentive to de-risking supply chains beyond China. As a result, countries such as Vietnam, Thailand and Mexico are offering lower tariffs on components to grab the space vacated by China.

Ministry of Electronics and Information Technology (MeitY) on the issue

  • Ministry of Electronics and Information Technology (MeitY) relayed concerns about high production cost due to high tariffs to the Finance Ministry.
  • MeitY had pushed for a lowering of duties of about 20 per cent on parts including circuit boards, chargers and fully assembled phones, by at least 5 percentage points.
  • This was partly agreed to and the government reduced duty on several IT goods ahead of the Interim Budget 2024.

Why India’s trade with China is important?

  • Top source of imports:India’s trade with China is important because, for the last 15 years, China has been India’s top source of imports.
  • Double share:To put these numbers in perspective, in these two years, the second biggest source of imports for India was the UAE, with an import share of 6.7 per cent in 2020-21 and 7.31 per cent in 2021-22. These numbers indicate that China is not only India’s biggest source of imports, but its share in total Indian imports is also more than double that of the UAE.
  • Dominance in non-oil merchandise imports:In total non-oil merchandise imports, China’s dominance is even more pronounced. As oil imports account for 25-30 per cent of India’s total imports, India’s dependence on China for non-oil imports can be as high as 25 per cent or more.
  • Export Market: China is a big market for Indian exports, as well. China has been among the top four export markets for India in the last few years. After Covid, India’s exports to China have gone up.

The trade numbers

  • India-China trade continues to remain high despite bilateral tensions as the total trade last year climbed to a record USD 136.2 billion with India's trade deficit mounting to USD 99.2 billion, a tad lower than last year.
  • China's exports to India stood at USD 117.7 billion, a bit lower compared to USD 118.5 billion last year, according to the annual trade data covering the period from January to December 2023 released by Chinese customs last month.
  • India imports from China: Electrical machinery and equipment, fertilizer, antibiotics and organic compounds.
  • China's imports from India totalled USD 18.5 billion slightly higher last year compared to the 2022 figure of USD 17.48 billion.
    • India’s top exports to China: Diamonds, cotton yarn, iron ore, copper and organic chemicals.

Verifying, please be patient.

Enquire Now