Japan has asked India not to raise import tariffs or impose restrictions on intermediate products sourced from China by Japanese companies based in the country, including those manufacturing automobiles and consumer durables.

In a representation given to the Department for Promotion of Industry and Internal Trade (DPIIT) recently, officials from the Japan’s Ministry of Economy, Trade and Industry (METI) said that raising tariffs or restricting imports of crucial raw materials sourced mostly from China could hurt production activities in India and also hamper exports, a Japanese official told BusinessLine .

JETRO survey

“The list of about 990 items that Japan wants India to exempt from possible import restrictions has been prepared based on a survey by Japan’s External Trade Organisation (JETRO), a body under METI. JETRO sent questionnaires to 1,023 Japanese manufactures in India and about 106 companies responded listing their important imports from China,” the official said.

The 990 tariff lines in 8-digits (about 200 in 4-digits) identified in the survey include electronic items, bolts, nuts, air conditioner compressors, integrated circuits, condenser, batteries, LED, inductors etc.

The survey has been in response to an ongoing exercise reportedly being carried out by the Commerce & Industry Ministry to identify items that are mostly imported from China so that higher import tariffs and other restrictions could be imposed. The idea behind the move is not only to reduce India’s huge trade deficit with China, which declined a little last year to about $48 billion, but also to retaliate against the Chinese for engaging in violence at the Indo-China border in East Ladakh.

“Japan feels that import tariffs should not be increased on raw materials as it hurts domestic manufacturing industries that use the inputs.

“The imported raw materials are essential for ‘Make in India’ and exporting from India in a globally competitive manner,” the official said.

Push for ‘local’

As per the survey, almost all Japanese companies in India are trying to maximise local procurement.

However, most companies noted that there is a scarcity of local vendors who satisfy required quality, cost and delivery levels.

“Imports of materials and parts are source of competitiveness for exporting to Europe, US, and Africa. This means that these raw materials or intermediate goods have to be imported in the short run. Companies cannot find alternative sources in a short period,” the survey noted justifying imports from China. Top Japanese companies in India include Sony, Hitachi, Honda, Panasonic, Yamaha, Toyota, Canon, Suzuki and Mitsubishi.

The number of Japanese companies in the country increased to 1,441 as of October 2018, with manufacturing firms accounting for half the total, according to Japanese government figures.

These 1,441 companies have in all 5,120 business establishments in India.