Think it through: Unannounced delays in clearing Chinese imports hurt Indian firms, smarter strategy needed

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The marked deterioration of India-China ties has manifested itself in the economic sphere. There have been complaints from industry bodies over the last few days that their imports from China are being held up in ports. So much so that MSME minister Nitin Gadkari had to write to the finance and commerce ministers to sort out the matter. His point being that it’s Indian firms who are hurting, as imports they have paid for are being held up.

Gadkari is spot on. For sure, India has to begin disentangling its economy from China’s. But the manner in which it needs to be done has to be thought through. Knee-jerk reactions will only add to domestic stress. It could lead to shortage of medicines and healthcare equipment, essential to fight Covid. It calls into question India’s reliability as a manufacturing destination for MNCs. For example, the unusual delays in clearing merchandise coming in from China have also hurt MNCs whose supply chains span many geographies. The US-India Strategic Partnership Forum has alerted the government to the damage arising out of these delays.

Globalisation now spans all sectors of an economy. As Gadkari observed, a farmer delegation met him to urge removal of unannounced delays in customs clearances at ports as their imports of sprays for pesticides have been held up. Some Indian exporters are also at the receiving end of retaliatory action by the Chinese. None of these examples take away the need to distance India from some Chinese equipment right away. Telecom network equipment and merchandise imports for the power sector are strategic areas, gravely vulnerable to cyber attacks. There shouldn’t be room for illusions anymore: if we allow the Chinese to hack our networks and conduct cyberwarfare, they will.

But there must be a smarter strategy, overall, on imports. A modern economy is a highly complex network whose component parts cannot be disentangled through simplistic measures. India has the right intent in reducing its dependence on China. But this needs to come about after a realistic assessment of the situation and deciding on stages of disengagement. To prevent further damage to the domestic economy, unannounced measures such as checking all consignments even in a fast track system must be rolled back. India’s ability to wean away supply chains from China depends partly on the reputation it has in the ease of doing business. Delays won’t burnish it.

This piece appeared as an editorial opinion in the print edition of The Times of India.

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