IT import review by India yet another step in the wrong direction for bilateral ties

By Xiao Xin Source:Global Times Published: 2017/8/16 22:08:39

The Indian government has started a review of information technology (IT) imports from China, the Times of India reported on Wednesday, citing security and data leakage concerns amid an ongoing border standoff.

Understandably, the Doklam face-off unnerves India, which is inclined to turn the screws on China. But New Delhi should be sober-minded and avoid resorting to ill-advised policies such as placing import restrictions on electronics and IT products from China. Impulsive actions often lead to regrets, and if the Indian government moves one step beyond the review it is reportedly doing, the country will bear the brunt of economic damage resulting from its thoughtless action.

The Times of India report mentioned Chinese businesses' growing engagement in India's electronics and IT sector, which according to a recent study by the Confederation of Indian Industry is currently valued at nearly $22 billion. It is fair to say that Chinese companies have become the backbone of India's electronics and IT manufacturing sector, which relies on key components and finished goods from China.

But rather than seeing it as a sign to pursue closer bilateral economic ties, New Delhi seems to have taken a wrong turn. The review of IT imports, added to India's recent decision to impose anti-dumping duties on 93 products from China, won't do New Delhi any good. A trade war is unaffordable for India and will only deepen India's trade imbalance.

It is becoming all the more important for India to value closer economic cooperation with China, as India needs China to finance its massive infrastructure needs. Any practice that appeals to unscrupulous populism, for example blindly restricting imports of Chinese products amid the border dispute, would be as unwise as it can be.

As for concerns over the trade imbalance, it needs to be noted that India's trade deficit with China is due to different economic structures. Restricting imports from China won't address the trade imbalance issue. If India really wants to move its trade with China out of deficit territory, a workable approach would be to take advantage of investment by Chinese businesses in India to boost the competitiveness of its exports to China.

That means the two countries should cooperate more closely in the economic sphere rather than the other way around. The Indian government shouldn't go any further than putting IT imports from China under the scanner.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn

Posted in: EYE ON THE ECONOMY

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