Japanese trade organisation Jetro has requested the Indian government to exempt Japan-affiliated companies from the expected increase of import tariffs on Chinese goods. Jetro has communicated its concerns to India’s Department for Promotion of Industry and Internal Trade.
India’s Commerce Ministry is mulling to increase tariffs on several goods imported from China. Following the border dispute between India and China in June and the aftermath of the COVID-19 pandemic, the Indian government has launched a self-reliance program to reduce its dependence on goods imported from China. To promote and improve the competitiveness of domestic producers in the Indian market, the government has decided to increase import tariffs on products procured from China.
Jetro has submitted a list of items imported by Japanese-affiliated companies in India seeking a waiver from import restrictions if imposed by the Indian government. The trade body has requested India to exempt parts and intermediate materials that are essential for manufacturing goods by Japanese joint ventures in India.
The target of tariff hike includes consumer goods, raw materials, intermediate goods, and capital goods which aim to encourage domestic production of these goods over the medium to long term. India is also considering anti-dumping duty on aluminium and steel products.
Raising import tariffs or restricting imports of crucial raw materials, mostly from China, could hurt production in India and hamper exports, according to Japanese officials reported local media. Jetro has shortlisted 990 items that Japanese companies in India have requested an exemption for including integrated motors, gearboxes, prockets, shafts, engines, values circuits, electronic items, air conditioner compressors, condenser, inductors, aluminium fin/tube material, bolts, nuts, batteries and LEDs.
Major automobiles companies including Suzuki, Honda, Toyota and Yamaha have production base in India as well as electronics companies like Canon, Sony and Panasonic manufacture products in India. Jetro stated that Japanese companies would like to diversify their procurement sources within India and alternative countries, but companies cannot find alternatives in a short notice.
Around 20pc Japanese companies operating in India have achieved 100pc domestic procurement, while about 70pc procure 50pc of their material from the domestic market. There is a scarcity of local vendors who can provide the required quality, scale and cost-effective production. Imports of materials and parts are essential to maintain the competitiveness to Japanese manufacturers’ export to the US, Europe and Africa, noted a survey conducted by Jetro.