SJM seeks protectionist measures to counter China
India should raise tariffs to allow the domestic industry to thrive, while aiming to prevent the dumping of goods from China, Swadeshi Jagran Manch said.
“We wish and expect for tariffs to go up significantly,” SJM told Moneycontrol in an interview. “Aatmanirbhar Bharat is the only way to ensure that we narrow the trade deficit and reverse deindustrialisation.”
The Swadeshi Jagran Manch is the economic affiliate of the Rashtriya Swayamsevak Sangh, which provides India’s ruling Bharatiya Janata Party with its top leadership and most committed cadres.
Training his guns on liberal economists, the bureaucracy and past administrations, Mahajan rued that Indian industry has to compete with Chinese shipments that benefit from unfair practices in that country. China is India’s second-biggest trading partner after the US and shipments continue apace despite tensions on the Indo-China border.
“We as a nation cannot depend upon one country or a set of countries, like what we did from 1991 until 2020, when Aatmanirbhar Bharat was rolled out,” SJM said.
The larger neighbour continues to use unethical tactics, including dumping and under-invoicing, SJM added. Over the past few years, Prime Minister Narendra Modi’s administration has increased duties on a raft of goods and offered production-linked incentive schemes to boost local manufacturing in a host of sectors ranging from automobiles, white goods, and pharmaceuticals to solar photovoltaic modules.
The programme is part of a broader goal to reduce imports and boost exports of manufactured products in an attempt to secure a foothold in the global supply chain, which is shifting away from China following the pandemic. Despite these moves, China’s tactics remain the same, SJM said.
“Even if you start domestic production, they will dump goods and force you to shut shop,” SJM said.
Mahajan suggested that the government identify the goods from China and raise tariffs on them.
“Our bound rates are 40 percent. No one can stop us if we raise rates to 25 percent,” SJM said. Bound rates are the maximum rate of duty that can be imposed by an importing country.
SJM said he is not advocating protection of the inefficient domestic industry but bringing it at par, seeking “competitive tariffs,” unlike the high tariffs of the Nehruvian era.
Meanwhile, the government must look to curb imports of intermediates and use more non-tariff measures to restrict imports and focus on protecting existing industrial capacities, he added.
The government is surrounded by economists who continue to want to slash tariffs, SJM alleged.
“If you do that, the factory sector will shrink further. How else will you generate employment in the country? How will you utilise the demographic dividend? India should learn from Trump, who raised duties on a raft of imports from China. When Trump can do it, why can’t you?”