The Commerce Department is considering imposing duties on over a 100 products that India imports heavily from China in light of the coronavirus (Covid-19) outbreak. The issue is set to be discussed early next week as the department meets with industry bodies to discuss the widening supply gap for key imports.
The government is currently walking a tightrope, balancing its demand priorities with the ambition to knock out Chinese goods and push domestic products in local markets. It aims to quickly leverage domestic manufacturing when Chinese factories remain closed by raising import duties on semi-finished or manufactured products.
However, India’s production capabilities remain limited for many of these items. “It’s tricky to increase imports at such a time. If the situation does not change quickly and prices of industrial components begin to rise, an increased import duty will have the opposite effect on both consumers and growth,” a senior official said.
The Confederation of All India Traders has warned that stuck shipments for basic commodities have started to quickly deplete available inventories at wholesalers and retailers, and that prices might rise if the situation doesn’t improve by mid-March. On the other hand, industry bodies have also warned that importers haven’t been able to put in new orders since mid-January.
China is India’s largest source of imports with $70 billion worth of products reaching Indian markets from Chinese shores. Despite this, a significant share of Indian importers across a broad range of sectors have continued to rely on regular trips to manufacturing hubs in China to place orders for products. With these visits now called off, importers fear they would lose out once the situation normalises and importers from other nations scramble to call in their own orders.
No shipping ban
Domestic industry has also been rattled by rumours of China shutting down one or major seaports from March 1.
The Covid-19 outbreak has led to a decline in the number of ships calling on major Chinese ports, including Shanghai and Yangshan, in January when port calls declined by 17 per cent, compared to the previous year, according to local statistics accessed by media. However, while other nations have decided to limit shipping from China, the Chinese government has not announced any diktat to close ports yet, senior government officials and diplomatic sources confirmed.
China is the largest container cargo handler in the world, processing 30 per cent of global traffic or around 715,000 containers a day in 2019, according to global financial market and infrastructure data provider, Refinitiv.
The International Chamber of Shipping recently stated that by implementing certain preventive measures for Covid-19, ports in China can continue to operate. It recommenced exit screening at all ports in the affected areas to isolate passengers displaying symptoms of the disease.
As of now, the government has ordered that Customs clearance facility remain open 24x7 at all sea ports and airports till May, official sources said.
Central Board of Indirect Taxes and Customs (CBIC) Chairman Ajit Kumar has written to all Chief Commissioners (Customs and Central Tax) asking them to work out the arrangement and deploy sufficient number of officers at all 'seaports, cargo stations, inland container depot, container freight station,' under central government jurisdiction.
Sources added that late fees arising out of delayed receipt of documents will also be waived, under certain circumstances. A help desk on the ICEGATE website, CBIC's e-commerce portal, has also gone live.