Focus: GS-II International Relations

Why in news?

India suspects that China could be engaging in unfair trade practices by supplying goods and investments through a third party such as Hong Kong and Singapore.

Details of Alleged Foul play by China

  • Data suggests significant indirect inflow of Chinese goods and investments through locations with which India has free trade agreements (FTAs), preferential trade agreements (PTAs) or other bilateral commercial arrangements. This is not only illegal but also injuring domestic industry
  • Data shows that total foreign direct investment (FDI) from China is minuscule, but many Indian firms have received Chinese investments.
  • Similarly, imports from China have registered a minor decline recently, but at the same time imports from Hong Kong and Singapore have surged.
  • According to the Federation of Indian Export Organisations (FIEO), while India’s trade deficit with China narrowed in 2019, the gap with Hong Kong widened sharply.

Way Forward

India needs be extra cautious in case of imports from Singapore because of the India-Singapore Comprehensive Economic Cooperation Agreement (CECA) as well as India-ASEAN {Association of South-East Asin Nations} Free Trade Agreement (FTA) that increase the possibilities of re-routing of Chinese products to India to derive a preferential tariff advantage.

Customs can always ask importers to provide the proof of adhering to the Rules of Origin.

Click Here to read more about India’s Trade Deficit with China

-Source: Hindustan Times

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