Nation must know how dependent it has become on those with hostile interest

Commerce minister Piyush Goyal on Friday said India has become dependent on a country which has "inimical interests" and it is important that it realises this.

Replying to supplementaries during question hour in the Rajya Sabha, he said the high trade deficit of USD 48.5 billion in trade between India and China inherited in 2013-14 cannot be ignored and the government is now taking steps to promote domestic manufacturing sector.

He said the India-China trade in 2000-2001 was barely USD 2 billion and that position continued till 2002-03 where it increased at best to about USD 5 Billion.

"At that time the trade deficit was just about USD 1 billion. I don't know what happened after that, but suddenly after 2003-04 the USD 1 billion trade defict over the next ten years increased to USD 36 billion in ten years," he told the house.

 

The entire country, he claimed, became a large marketplace inviting sub-standard, opaquely priced, non-transparent valued goods into the country in a big measure, because of which our imports increased from USD 4 Billion in 2003-04 to USD 51 billion in 2013-14.

"In a manner we opened ourselves to a large number of dependencies on China. We became so dependent on China that we imported products which were India's strength, like active pharmaceutical ingredients. We used to export the APIs to the world. Sadly, we gave up that entire industry to China," he said, adding that the government has been focussing on its Make in India initiative.

"In these 10-12 years, India lost its strength in areas which it once had. The domestic industry became dependent on China and this includes the capital goods industry and electronic industry became dependent on Chinese goods," Goyal claimed.

"It is important that the country realises that how we have become dependent on a country which has inimical interests. This government has through a number of initiatives today focussed its attention on promoting Make in India.

"We have introduced a number of production linked incentives schemes. We plan to make our manufacturing sector competitive and start reducing imports from China," the minister told the house.

He cited the example of mobile phones which India imported as it had only two plants in India. Thanks to PLI scheme, he said, today the nation has 200 companies in mobile ecosystem. "We are not only producing in India, but are also a large exporter of mobiles to the world."

"The trade deficit rose from USD 1.5 billion in 2004 to USD 48.4 billion in 2014-15. We cannot ignore this trade deficit," he said, adding that the government is holding discussions with local industry to manufacture products in India.

"We have set up a Steering Committee for advancement of localisation and promoting employment and export scale. PLI schemes designed on its basis and not at the whims and fancy of anyone. We are rectifying things that were destroyed including banks and manufacturing sector," the minister said.

PLI, or Production-Linked Incentive, scheme is a government initiative to boost domestic production.

Goyal said that over the years India became "so helpless" and its manufacturing sector became "so weak."

"The fact that the current trade deficit is going to be high is a sign of economic activity in the country. The fact that we are importing machinery shows that the country has now started investing and gross capital formation in the country is increasing and the fact that we are increasingly consuming goods will give confidence to new investors to invest in manufacturing," he said.

This, he said, is a cycle investors keep watching and when they see demand and consumption, they import capital goods and noted that the country is also seeing revival of domestic indigenous start ups to promote Make in India.

In his written reply, the minister also said, "The trade deficit with China in 2004-05 was USD 1.48 billion, which increased to USD 36.21 billion in 2013-14, an increase of 2,346 per cent. Against this massive increase, the trade deficit with China has since increased by only 100 per cent to USD 73.31 billion in 2021-22."

The PLI schemes, he said, have been rolled out and the manufacturing units are in the process of setting up capacities.

"Good results are already visible in sectors like mobile phones, and we would see positive developments in the other sectors in the recent times also," Goyal said.