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Regular-article-logo Wednesday, 17 April 2024

Protectionism tactic, aimed at China goods

It has become mandatory for sellers to declare the country of origin of products and services on the government procurement portal

Our Special Correspondent New Delhi Published 24.06.20, 02:45 AM
Vendors, selling Chinese goods, wait for customers in Noida on June 18

Vendors, selling Chinese goods, wait for customers in Noida on June 18 (AP)

The Narendra Modi government is tightening the screws on Chinese companies.

The government has winched up its economic retaliatory response by making it mandatory for sellers to declare the country of origin of the goods and services on the government procurement portal, GEM.

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The Government e-Marketplace (GEM) portal has also enabled a filter that requires sellers to declare the percentage of local content in the products they sell through the platform, ostensibly in a bid to promote the Make in India movement.

A Make in India filter will ensure that the government and its agencies only pick products that contain a minimum of 50 per cent local content, the commerce and industry ministry said in a statement.

Sellers who had already uploaded their products have been warned that their products would be removed from the portal if they fail to update the country of origin.

Citizens burn products made in China during a protest in Lucknow on June 17, 2020.

Citizens burn products made in China during a protest in Lucknow on June 17, 2020. (AP)

Total purchases through the GEM portal are expected to increase to Rs 3 lakh crore from a mere Rs 50,000 crore in the last fiscal — and the latest changes will raise protectionist barriers against imported goods.

The notice does not single out China by name but it is evident which country is being targeted.

A similar ruse was used in late April when the government recast its foreign direct investment policy, putting in place a new regulatory oversight mechanism that was a thinly disguised attempt to stop Chinese investors from scooping up stakes in Indian companies whose valuations had melted after the coronavirus outbreak.

At that time, the department for the promotion of industry and internal trade (DPIIT) had said countries that shared a common barrier with India would require government approval before investing in an Indian company in a bid to stop opportunistic takeovers.

Tightening rules

The Centre had changed government procurement rules last month while announcing its stimulus package under which it jettisoned the practice of global tendering for contracts worth less than Rs 200 crore, reserving a big chunk of such purchases for small and medium businesses.

“The marketplace has facilitated entry of small local sellers in public procurement while implementing ‘Make in India’ and MSE Purchase Preference Policies of the Government in the true sense,” the commerce ministry statement said.

“GeM is enabling quick, efficient, transparent and cost-effective procurement, especially in this hour of need when government organisations require products and services urgently to fight against the Covid-19 pandemic,” it added.

The economic wing of the Rashtriya Swayamsevak Sangh (RSS) described the government’s move as another step to help curb Chinese imports.

“The government should extend the rules to all platforms so that consumers get a choice not to buy Chinese products,” said Ashwani Mahajan, co-convenor of the Swadeshi Jagran Manch.

Praveen Khandelwal, secretary-general of the Confederation of All India Traders which represents the small businesses in the country, endorsed the RSS demand.

“Such a provision should also be applicable on all e-commerce portals operating in the country. Since the government has begun the step with itself, it’s a perfect reflection of ‘charity begins at home’ and the commerce ministry should immediately issue a notification to make it mandatory for all e-commerce portals operating… in India.”

Amazon and Walmart are the biggest players in India’s e-commerce space and have been battling a rising tide of protectionism in the country.

Earlier this month, the government modified public procurement norms to give maximum preference to companies whose goods and services have 50 per cent or more local content, a move aimed at promoting “Make in India” and making the country self-reliant.

The revised public procurement (Preference to Make in India) Order, 2017, introduced a concept of Class-I, II and non-local suppliers, based on which they will get preference in government purchases of goods and services.

Launched in 2016, the GeM portal is used for online purchases of goods and services by all the central government ministries and departments.

Currently, government departments, ministries, public sector units, state governments and central armed police forces are allowed to carry out transactions through this portal. Items on sale include a wide range of products from office stationery to vehicles.

So far, 394,461 sellers and service providers are registered with the portal to sell 18,30,688 products and several services.

India is also planning to impose higher trade barriers and raise import duties on around 300 products from China and elsewhere as part of an effort to protect domestic businesses.

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