New Delhi - Chinese imports are hitting the Indian industry hard and causing unemployment with Indian government not doing enough to tackle the situation, a parliamentary panel has said in its hard-hitting report.
It also expressed concern at India's widening trade deficit with China.
"At a time when there is an urgent need to stimulate our manufacturing sector to at least 25% of country's GDP, Chinese imports have thrown a spanner in the wheel of India's economic progress per se and industrial manufacturing in particular," the Parliamentary Standing Committee on Commerce has said in its 145th report that was tabled in Rajya Sabha on Thursday.
"The deluge of Chinese imports in the Indian market is wiping out many domestic industries and is a cause for serious concern. The Chinese import is so hard-hitting on Indian industry that many manufacturers have been forced to become traders," it added.
Some of the lacuna identified by the committee that the Indian authorities have not been able to tackle effectively are under invoicing of Chinese goods, dumping of cheap goods, entry of prohibited goods by misdeclaration and smuggling.
"China faces a major chunk of anti-dumping investigations which is a clear indication that Chinese goods are causing unfair trade disruption," the panel noted.
Dumping is when a country or company exports a product at a price that is lower than the price in the exporter's domestic market.
It found out that a number of industries that have been adversely affected by the import of Chinese goods are labour intensive. These industries have traditionally been large employment generators in India, such as textiles.
It observed that the closure of industry will also stress the banking sector which already is reeling under the burden of huge NPAs.
India's bilateral trade has increased from $38 billion in 2007-08 to around $89.6 billion in 2017-18.
In 2013-14, the Chinese import was approximately to the tune of about 11.6% of all Indian imports. By 2017-18, it has increased to about 16.6%.
"The trade deficit with China at $63 billion constitutes more than 40% of India's total trade deficit. The Chinese goods itself constitute about one-sixth of all imports in terms of quantum in India," the report pointed out.
During the period 2007-08 to 2017-18, there has been an increase in India's exports to China by $2.5 billion; the imports, however, increased by $50 billion during this period.
"In addition to revenue and employment, low-quality Chinese imports also have an adverse impact on the environment. Poor quality toys, colours, firecrackers, statues of gods and goddesses, etc. from China, are health hazards in Indian household.
"The Committee is alarmed that Indian consumers get attracted to these products for their low price without regard to the safety hazards entailed with such products. There is an urgent need to devise a strategy in which the domestic MSME product, which is better in quality than the Chinese cheap products are given their due premium through the organized retail sector," it said.
The panel has advocated creating public awareness to discourage buying of sub-standard imported products and putting in place a strong quality control framework.
"The Committee finds it unfortunate that in the name of 'ease of doing business', we are more than willing to give market access to Chinese goods which is destroying our manufacturing while China is smartly protecting its industry from Indian competition. The Committee strongly recommends that BIS must also reciprocate in the same manner as the Chinese," the report said.