In a move aimed to hurt China’s shipping companies (mostly state-owned), Indian oil PSUs have decided to stop hiring Chinese tankers to move their crude and other petroleum products. The ban will be effective on chartering tankers that operate under the flag of a third country but operated by Chinese companies, too. “China-flagged and owned vessels have been barred from bidding on tenders for chartering tankers to import crude into India, or export products such as diesel out of the country, according to people familiar with the matter,” wrote Bloomberg, which broke the story.
Indian oil refining sector is dominated by state-owned companies- Indian Oil, Bharat Petroleum and Hindustan Petroleum- in refining as well as distribution except the one large private sector player being Reliance Industries Limited.
The Government of India is trying to throw Chinese companies out of India’s supply in one sector after another since the border clash in Ladakh. The power sector, where Chinese players have large scale involvement and bagged some of the biggest projects in the last few years, banned Chinese companies altogether in production as well as distribution.
Thanks to pro-active measures taken by the government, imports have fallen drastically in the last few months. As per the data from the Chinese government’s customs department, it seems that India has so far been successful in pushing down China to its knees. The reports suggest that the imports from China have fallen sharply by 24.7 per cent while the exports have gone up by 6.7 per cent in January.
For long, successive Indian governments had tried to kick China out of the market. The anti-China rhetoric was used to build up whenever there was any tension at the border, only to cool down after a few months.
India imported goods and services worth 65.26 billion dollars from China FY 20 while the total trade volume stood at 81.6 billion dollars, registering a trade deficit of total 48.66 billion dollars. This was even though the Modi government had increased customs duty on many Chinese goods like steel, toys, scooters, and tricycles.
However, this time, the effect of boycott China is visible on the ground as exports have shot up while imports are on a downward spiral. The total business with China this year stood at 43.47 billion dollars with a drop of 18.6 per cent. The government initiatives to kick China out of Indian supply chains are now showing results on ground zero as the government’s nudge is in align with people’s anti-China sentiments.
In the last few weeks, the government has used many non-tariff barriers at its disposal to bar Chinese goods entering the Indian market. The government is seeking to boost exports to provide large scale employment to semi-skilled and unskilled labour. “China has been very effectively using non-tariff barriers to curb imports that it wants to avoid. On the other hand, it also uses these restrictions as a political tool to control bilateral relations,” said Biswajit Dhar, a senior trade policy expert and professor at Jawaharlal Nehru University.
Many union government ministries, including the railway and telecommunication, have revoked the contracts given to Chinese companies. BSNL, the state-owned telecom company, has been told to not use Chinese-made equipment in its 4G up-gradation. “The entire tender will be reworked now,” said an official. The Department of Telecom also told the private companies like Airtel and Vodafone to reduce their dependence on the dragon. These companies use 25-30 per cent of their equipment by Chinese companies like Huawei and ZTE.
With the rising anti-China sentiment in the whole country, the cooperation between all the three players involved in the trading process– consumers, traders, and the government, has resulted in the substantial downfall of imports while exports shot up. The Modi government is succeeding in throwing China out of India’s supply chain and for Chinese companies, this resulted in the loss of billions of dollars so far.