Trade imbalance between India and China worrisome: Experts
Experts say that the growing imbalance poses serious threat to small-scale industries in the country.
lion (Rs 4.76 lakh crore) in 2015-16. During this period, India’s exports to China came in at $9.68 billion while imports stood at $61.54 billion. “The growing trade imbalance with China is a kind of threat to India and this has to be checked. Growing imports of even goods available locally in India have posed a serious threat to small-scale industries and the government should act to harmonise the trade imbalance with China,” a senior CII office bearer said.
Criticising the growing demand for blanket ban on trade with China, the CII official said that the CII is against of any ban on trading. “By promoting Make in India, pushing medium and small scale industries, creating ease of doing business and taking other such steps, the country can reduce the growing trade imbalance with China,” the CII official said.
On the growing demand for banning trade with China, Raman Prasad, professor at the Institute of Chinese Studies (ICS) in Delhi, said “Securing the national interest is paramount for any sovereign country in the world and India is no exception to that. India can take a number of measures to prevent the flooding of Chinese goods in the country. One of the most important tools provided under the ambit of WTO rules is using Anti-Dumping Duty (ADD). The ADD will prevent the dumping intention of Chinese traders.”
Mohinder Singh, another professor at the ICS, said: “Blanket ban on Chinese trade will hurt the general environment and violate terms of international trade, but the country can use ADD and a goods-wise policy to prevent the dumping of Chinese goods. Other measures include bilateral talks with the Chinese authorities to increase Indian exports to China.” According to Professor Singh, the increasing trade deficit with China can primarily be attributed to the fact that Chinese exports to India rely mostly on manufactured items meeting the demand for fast-expanding sec- tors like telecom and power, while India’s exports to China are characterised by primary products, raw material and intermediate products.
“India is exploring all measures, including ADD, to bring down the trade imbalance with China, but the need is to evaluate trading at the micro level with China,” Singh told The Sunday Guardian. “So far, there have been 322 anti-dumping cases, of which 177 cases involve China. In order to boost exports and maintain the balance of trade with China, India has impressed upon the Chinese authorities to recognise the need for reduction in trade imbalance for long-term business prospects,” Singh added. Exide Industries Limited is the country’s largest manufacturer of batteries and power storage solutions provider. It has risen from a small emergency light battery manufacturer to huge submarine batteries. The brand enjoys a nationwide respect and recall. The company’s nine factories are strategically located all over India, of which seven factories are dedicated to batteries, while two factories manufacture home UPS systems. The company manufactures a wide range of batteries for the automotive, power, telecom, infrastructure projects, computer industries, railways, mining, renewable energy and the defence sectors. Exide Industries consistently remain at the forefront of international battery technology, with the help of its collaborators— Shin Kobe and Furukawa of Japan, East Penn of the US and Ecoult of Australia. It has introduced various best-in-class products and power storage solutions for domestic and global markets. Sales of automotive batteries for four and two wheelers have registered a double digit growth in volume in 2016-2017, as compared to the previous year. In spite of the competitive market conditions, the company continues to remain the preferred supplier to most of the vehicle manufacturers in the country. It has become the preferred choice for most of the original equipment manufacturers in the UPS segment, because of superior product performance, excellent after-sales service and cordial relationship with the customers. The company’s advanced products have received great response from telecom customers and the products have been found to be superior in performance and have made significant inroads in establishing itself as a preferred vendor in the telecom segment. The solar division has registered a robust growth and the company has now forayed in offering complete packages for the home usage of the customers. The company has growth opportunities in the industrial and automotive division, especially energy storage, solar, telecom, e-rickshaw and commercial vehicle divisions. It also has an advantage of having a strong brand value, large network, widely spread product range, strong partners and collaborators relationship. The company achieved a turnover of Rs 23,763.60 million for the 1st quarter of the FY 2017-18, as against Rs 22,649.20 million in the corresponding quarter of the previous year. During the quarter, net profit stood at Rs 1,890.00 million from Rs 1,960.50 million in the corresponding quarter ending of the previous year. Reported earnings per share of the company stood at Rs 2.22 in Q1 FY18 as against Rs 2.31 in the corresponding quarter of the previous year. Profit before interest, depreciation and tax stood at Rs 3,374.80 million as against Rs 3,292.40 million in the corresponding period of the previous year. As the overall economic growth outlook of the country has improved with the Goods and Services Tax implementation, it is expected that this will facilitate the industry to grow at a faster rate in the medium to long term. The Exide stock, currently quoting at Rs 215, is a good portfolio buy, with both traders and analysts expecting the stock to appreciate by 18% in six months. RAJIv KAPOOr Is A sHArE BrOKEr, CErtIfiED MutuAL FuND ExPErt AND MDRT insurance agent.