NEW DELHI: India is drawing up a strategy to curb cheap imports from any source and not just China in order to achieve its self-reliance goals, a senior government official told ET. Toward this end, the government is drawing up short-term, medium-term and long-term plans, he said.

In the short term, it could opt for non-tariff barriers such as nominating a specific port for a category of goods or mandating prior approval for select products, such as licensing requirements. Tariffs could also be raised where possible to impose a comprehensive deterrent on the import of cheap or non-essentials.

In the medium term, free trade agreements (FTAs) will be reviewed to bring about a balance in trade and put more effective rules of origin in place.

Cost Analysis of Higher Tariffs

“The whole idea is to boost local production and cut reliance on imports in general… Imports from no specific country are being targeted,” said the person cited above.

The government is also drawing up a comprehensive list of non-essential imports as part of the exercise.

Measures such as nominating specific ports for clearance of goods that India wants to curb can lower or even erode price advantages, bringing them on par with locally made items.

Although higher tariffs remain on the agenda, these have not always been found to be helpful as importers then switch to the FTA route, the official said.

The government will carry out an in-depth study on the cost implications of such moves before any steps are taken to address fears that import restrictions could also be counter-productive, denying India access to crucial inputs or equipment. The government has sought feedback on measures needed to lower the reliance on imports and boost domestic production.

Detailed discussions have been initiated with industry to identify those areas in which domestic industry can scale up production and the kind of support that will be needed for this to replace imports, said another official.

In the long term, the government is looking at providing incentives through schemes such as the production-linked subsidy scheme to multiple sectors to allow local industry to take root and eventually become globally competitive.

Measures for sectors such as chemicals, auto components, food processing, leather are under examination, the official said. These specific steps are over and above labour reforms, easier credit availability, cheaper land and ease of doing business through single-window clearances included in the wider reforms programme. However, imports that are crucial to the economy will continue until the long-term plan to make India competitive kicks in as the government does not want industry to suffer any sudden supply shocks at this juncture.

“It will need to be a steady process,” the second official said.

The empowered group of secretaries set up by the government to facilitate investment has already held discussions on available land that can be readily offered to investors.