Piyush Goyal explains why making license mandatory for some imports was necessary : 11-08-2020

Commerce and industry minister Piyush Goyal on Monday rejected the criticism of the government’s decision to make licensing requirements mandatory for imports of certain products, including colour TV and tyres, highlighting that such moves were necessitated by the absence of “fair and reciprocal” global trade practices.

He also asked foreign investors that have set up shop here to not seek unrestricted (duty-free) imports of components for mere assembly in India “as a matter of right”. “If they have invested in India and they want to engage with the Indian market, I believe they should look at indigenising, particularly those items where India has capabilities. We don’t get excited only by an investment which is brought into India to capture the Indian market, to save some import duties on finished products, and …to use India to only assemble those components,” he said at a Ficci event.

“I think they should, in a phased manner, look at sourcing from India, developing their products in India and then encashing a large business opportunity that 1.3 billion Indians are offering. We invite businesses, we are encouraging investments, we want to allow free flow of goods but it has to be reciprocal. It can’t be one sided,” Goyal said.

Countering the criticism that India is turning more protectionist, Goyal said such a perception “shocks” him, as trade is not being undertaken among equals. “What we are trying to do is make sure our domestic industry gets a fair play,” he said. Explaining his point, Goyal asked: “How can it be that one country does not allow tyres to be exported to them but wants free imports of tyres from that country into India? There has to be equal, fair and reciprocal arrangement. If other countries are desirous of 1.3 billion- Indian market opportunity, they will also have to give our country’s businesses equal opportunity to engage in their countries. They can’t put overarching technical barriers or overarching regulations on our products and then complain if we put any standards in our country.”

India in June made it mandatory for importers to seek permits for purchasing new pneumatic tyres. The move was seen as targeting imports from China, which makes up for a large chunk of these imports (about $370 million) into India. Subsequently, media reports suggested that German automakers had sought help from Germany’s envoy to resolve the issue of tyre imports.

Expressing surprise at some EU countries’ objection to India’s standard specifications for tyre imports, the commerce minister said he is “amazed” by this. “I can list out 5,000 items on which technical standards are being put in their countries. Why should India not have the right to put technical standards?”

While Goyal didn’t name any country, a fair chunk of his critical comments about dumping of substandard products in India, growing absence of trade transparency and reciprocity by some nations, etc, seems directed at China with which India ran a massive trade deficit of $48 billion in FY20.

The minister also remained critical of the criticism of the government’s push for localisation. “All these years, everybody used to say support our industry. They used to say how can we compete with countries that provide hidden subsidies? How can we compete when their interest rates are so low? How can we compete when we have a democratic and transparent way of working, while some others don’t? But when we do something enabling, we find some criticism. This is not business among equals.”

Source : PTI