Impact of the Surge in Chinese Import on Indian Manufacturing Sector. Jitender Singh. Assistant Director

Transcription

1 P a g e 1 Impact of the Surge in Chinese Import on Indian Manufacturing Sector Jitender Singh Assistant Director RESEARCH STUDIES OFFICE OF THE ECONOMIC ADVISER DEPARTMENT OF INDUSTRIAL POLICY AND PROMOTION MINISTRY OF COMMERCE & INDUSTRY UDYOG BHAWAN, NEW DELHI INDIA July, 2012 Vie ws expre s s e d in this pape r are t hose of t he author(s ) an d m ay not be at tribut e d t o the Government of India.

2 P a g e 2 Acknowledgement This Study w ould not h ave been pos s ible w ithou t the help of a num ber of people w h o w ith their k ind cooperation, active s upervis ion an d s tead fas t s upport have m ad e th is res earch w ork reality. I am extrem ely grateful to Principal Ad vis er Dr. Man jula Kris hnan, w hos e k een con tinuous encouragem en t and s ugges tions helped to com plete th is w ork. I am th ank ful to S hri S rik ara Naik, Econom ic Ad vis er and S hri M.C. S ingh i, S en ior Economic Adviser for his valu able com m en ts an d encouragem en t to com plete th is w ork. I als o extend m y s incere gratitud e to Ms. Man is h a Meen a, As s is tan t Director for s h arin g her valu able though ts an d helpin g in und ers tan d ing the d ata. I als o th ank Shri Purohit, Economic Officer who provid ed th e d ata s upport. Place: Date: Jitender Singh

3 P a g e 3 Impact of the Surge in Chinese Import on Indian Manufacturing Sector Abstract In d ian im port trend reported a s urge in recen t pas t few y ears, pos s ibly becau s e of cheap im port of Ch ines e m anufacturing good s. The trad e d eficit w ith Ch in a is als o ris ing along w ith ris in g reques t for in trod ucing an ti d um ping m eas ures agains t Ch ines e im port. Thes e trend poin ts the need to check the profile of im port from Ch in a an d its relation w ith our d om es tic m anufacturing prod uction s tructure. The m ajor ques tion ad d res s ed in th is res earch s tud y is : How are trend s in im port from Ch in a as s ociated w ith im port and m anufacturing in s pecific ind us try s ub-group in India? A concord ance betw een Ind ian Trad e Clarification bas ed on Harm on iz ed S y s tem (ITC-HS ) Cod e and Nation al Ind us try Clas s ification (NIC) at 5 d igit level is d eveloped for las t 7 y ears for 268 item s of IIP (Ind ex of Ind us trial Prod uction) and im port, and s eparately w ith im port from Ch in a. The ind ices for the im port, IIP (268 item s ) an d ind us try s ubgroups have been cons tructed. The export ind ex (us ed s am e m ethod ology an d concord ance) is tak en from an earlier S tud y by S in gh i, M.C The Ind ex of Ind us trial Prod uction (IIP) for 268 item s, Ind ex for Im port from all countries (Im port Ind ex from now ) and Ind ex for Export h as grow n res pectively by %, %, and 143.4% in over the bas e of The Chin es e im port ind ex (Ch in es e ind ex from now ) for s am e item s h as grow n by % in over the bas e , w h ich is m uch h igher th an the im port ind ex. The s h are of the im ports of 268 item s from Ch in a in total im ports from Ch in a to Ind ia h as jum ped to 41.3% in from 26.3% in There are enough evid ence to s us pect th at im port to In d ia from coun tries other th an Ch in a are now increas ingly been replaced by cheap Ch ines e im port. Therefore the im port to Ind ia is progres s ively concen trating w ith Chin a. Broad ly the B as ic Good s an d the In term ed iate Good s s ectors s eem to be negatively affected from the cheap Ch ines e im port. How ever, acros s industry sub-group there are num ber of prod ucts h aving negatively im pacted by Ch ines e import. The large im port from Ch in a are noticed in ind us try s ub-group of rad io, televis ion an d com m unication equ ipm en t, follow ed by Mach inery an d equ ipm en t, office accounting an d com putin g m ach inery, other tran s port equ ipm en t, electrical m ach inery an d apparatu s, Bas ic Metals, Fabricated m etal prod ucts, except m ach inery, Chem ical an d chem ical prod ucts, m otor veh icles, trailers and s em i-trailers, and rubber an d plas tic prod ucts. ***

4 P a g e 4 Impact of the Surge in Chinese import on Indian Manufacturing INTRODUCTION Th e tren d in im ports to In dia s h ows a s u rge in ch ea p Ch in es e im ports of m a n u fa ctu rin g goods to In dia, a ccu m u la tion in In dia s tra de deficit with Ch in a a n d ris in g requ es t for in trodu cin g a n ti du m pin g m ea s u res a ga in s t Ch in es e im ports poin ts th e n eed to ch eck th e profile of im ports from Ch in a a n d its rela tion with ou r dom es tic m a n u fa ctu rin g produ ction s tru ctu re. Th e m a jor question this research study attempt to address is: How trends in imports from China are associated with manufacturing production in India? Th e m a s s ive divers ified m a n u fa ctu rin g ca pa city crea tion in Ch in a du rin g recen t pa s t h a s res u lted in dom es tic m a rket s u rplu s es of m a n u fa ctu red produ cts. Th e h u n t for n ew m a rkets ou ts ide to du m p th is glu t produ ction is well ca ptu red in th e s ta tis tics. Ch in a s s h a re in world exports between 2000 a n d 2010 increas ed by 6.5 percen ta ge poin ts com pa red to In dia n just 0.8 percen ta ge poin ts. Arou n d h a lf of th is tota l in crea s e in th e Ch in a s share is with em ergin g a n d developin g cou n tries wh ile for In dia it is on ly 6 per cen t of the tota l in crea s e (Econ om ic Su rvey, ). Th e ea s y ta rget for Ch in es e exports is its proxim ity to In dia wh ere m a n u fa ctu rin g s ector is s tru gglin g to im prove its rela tive s tren gth in th e econ om y (m a n u fa ctu rin g s h a re in GDP is s ta gn a n t) a n d export of m a n u fa ctu rin g goods is la den on th e s m a ll sca le s ector or based on the use of imported raw materials. A rising input requirements for in du s try a n d m a n u fa ctu rin g goods dem a n d in In dia is reflected in in crea s e in the Non-POL non-bullion imports i.e. by 29.3 per cent in China h a s becom e th e la rges t s ou rce of In dia n im ports with a n 11.7 per cen t s h a re in its tota l im ports. In dia s low export / im port ra tio (0.45 in ) with Ch in a is res u ltin g in h u ge tra de deficit. Tra de deficit of In dia with China have in crea s ed from US$ 19.2 billion in to US$ 23.9 billion in indicating the surge in imports from China. Ch ea p Ch in es e im ports h a ve a ls o s u rged in Africa, US a n d La tin Am erica n Cou n tries. Ch in a beca m e bigges t tra din g pa rtn er of Sou th Africa in a s h ort s pa n of tim e. Th e Ch in es e exports to Sou th Africa es pecia lly in textile sector, a re bu llyin g loca l in du s tries in Sou th Africa. In Bra zil in du s tria l ou tpu t

5 P a g e 5 is a ls o gettin g a dvers ely im pa cted from im ports from Ch in a bes ides d u e to the sluggish global economy. In th is ba ckdrop th e m os t ob viou s qu es tion s likely to be ra is ed a re: why is t h ere a s urge in exp ort from Ch ina t o Ind ia in recent y ea r? Whether Ch ina s m a nufa ct uring is acquiring com p et it iveness over t h e t im e compared to India? The outward oriented growth in Chinese economy may be th e rea s on to boos t th e export a n d th erefore s u rge of im ports to In dia. Or Wh et h er Ind ia n manufacturing is los ing it s com p et it ivenes s a ga ins t China? On e m a y s u s pect a bou t los s of com petitiven es s of Indian Manufacturing in past few years, primarily due to fast rising cost of production, and infrastructure bottlenecks. Or Is t h ere a ny unfa ir p la y by t h e Ch ina t o d um p t h e glut in Ind ia? Th e u n fa ir pra ctices s u ch a s du m pin g of s u bsta n da rd glu t produ ction in to India from China also seems to partially responsible for surge in import. In dia s anti-dumping in itia tion s in crea s ed to 55 in 2008, fell to 31 in 2009, bu t a ga in in crea s ed to 41 in The main cou n tries in volved in th es e in ves tiga tion s a re Korea RP, Ch in es e, Ta ipei (Taiwan), etc.. Or Are im p ort from ot h er t h a n Ch ina t o Ind ia is get t ing rep la ced by Ch ines e im p ort? It m a y be pos s ible th a t th e im port from cou n tries oth er th a n Ch in a to In dia is in crea s in g bein g replaced by cheap Chinese import. Th e los s of com petitiven es s by th e In dia n in du s try a n d th e u n fa ir pla y, if any, are the most important questions to be answered first. If the answer is yes for on e or both, th en certa in ly it wou ld ca rry th e poten tia l to ca u s e in ju ry to th e In dia n m a n u fa ctu rin g in s h ort a n d lon g ru n. Th is s tu dy is a prelim in a ry investigation to look into the questions. OBJECTIVES OF THE STUDY: (i). (ii). To iden tify th e in du s try s u b-group, a n d produ cts wh ere th e im port, especially form Chinese, is impacting th e dom es tic manufacturing production; To iden tify th e in d u s try s u bgrou p, a n d produ cts wh ere th e im port from China is replacing the import to India from countries other than China; DATA SOURCES & METHODOLOGY

6 P a g e 6 The data of industrial production for 268 items is sourced from the Office of th e Econ om ic Advis er, Depa rtm en t of In du s tria l Produ ction & Policy (DIPP), Min is try of Com m erce & In du s try. Th e da ta on exports a n d im ports is ta ken from the Department of Commerce, Ministry of Commerce & Industry. The data on im port, export a n d dom es tic produ ction for 2 68 item s is synchronized by a con corda n ce between th e ITC (HS) code and NIC Cla s s ifica tion of in du s tria l Produ ction a t 5 Digit level. Ea ch HS code item for im port is regrouped against its res pective dom es tic in du s tria l produ ction a t NIC-5 digit code. Th e im port from Ch in a for th e 268 item s h a s a ls o been h a rm on ized in to th e NIC cla s s ifica tion a t 5 d igit level. The s tu dy covers a period of s even yea rs to Even a fter con corda n ce, th e figu re for im port, export a n d dom es tic industrial production may not directly be comparable. The domestic production figures for the 268 items are reported in different units e.g. tones, rupee crores, m eters etc., a n d m a y n ot be directly com pa ra ble with on e a n oth er a n d with im port figu res. Th e im port figu res h owever, a re a va ila ble u n iform ly in va lu e term s a n d th erefore ca rry effect of th e in fla tion, wh ich m a y be a bsen t from m a n y of th e dom es tic produ ction figu res reported in term s of ph ys ica l ou tpu t. Th erefore th e in dices a re con s tru cted for th e dom es tic produ ction a n d im port to make these comparable. Th e in dex of th e im port is defla ted with th e a ppropria te price in dex con s tru cted from th e Wh oles a le Price In dex (WPI) to elim in a te th e in fla tion effect on im port. Sim ila rly, for th e item s wh ere dom es tic produ ction is reported in va lu e term s, th e s a m e is defla ted with a ppropria te price in dices. Th e u s e- ba s ed in dices a re defla ted with th e overa ll WPI in dex for th e 268 item s. Th e fin a l in dices for exp ort for a re ta ken from a n ea rlier Res ea rch Stu dy by Mr. M.C. Sin gh i, Sr. Econ om ic Advis er, 2011, for Office of th e Econ om ic Adviser. Th es e 268 item s a ccou n t for 60.4% weigh t in th e m a n u fa ctu rin g s ector a n d 45.6% weigh t in th e overa ll In dex of In du s tria l Produ ction (IIP). Th e covera ge of DIPP a t broa d grou ps of m a n u fa ctu rin g va ries from a low of 1.1 % for manufacture of coke, refin ed petroleu m produ cts a n d n u clea r fu el to 100% in 15 groups (Singhi, M.C. 2011). LIMITATIONS OF THE STUDY: Th e s tu dy covers on ly 45.6% of th e weigh ts of IIP, 268 DIPP item s, for wh ich th e produ ction da ta is a va ila ble with th e Depa rtm en t of In du s tria l

7 P a g e 7 Produ ction & Prom otion (DIPP). Th erefore a ll th e lim ita tion s of IIP a re in h eren t in the analysis. RESULTS AND DISCUSSION Index of Industrial Production (IIP) for 268 Items The 268 items accounted for 23 % of the total Import to India in a n d 45.6 % of th e In dex of In du s tria l Produ ction. Th e in dices of IIP (268 item s ), Im port a n d Export respectively h a ve grown to 207.8, , a n d in over th e ba s e of (Table-1). Th e im port h a s been growin g consistently above the growth of IIP and the Export. In there is a surge in th e im port growth. Th e con s is ten t a n d rela tively h igh im port growth h a s led to in crea s e in th e s h a re of 268 item s im port in tota l im port to 27% in and 23% in (Table- 29 in Annexure). Table 1. Index of Industrial Production (IIP) (268 items), Import and Export Indices and Growth Year IIP Index IMP Index Export Index* Growth IIP Import Export Index of Chinese Imports Share of 268 items in total imports from China * Export Index is taken from the Research Study by Mr. M.C. Singhi, Sr. Economic Adviser, 2011, for Office of the Economic Adviser.

8 P a g e 8 Th e in dex of im port from Ch in a (Ch in es e In dex from n ow) for 268 item s h a s grown even fa s ter to in over th e ba s e of , com pa red to in dex of im port from a ll cou n tries (Im port In dex from n ow). Th is m a m m oth growth in Ch in es e In dex from pa s t s ix yea rs h a s been con s idera bly h igh er th a n th e Im port In dex. Th erefore, th e Ch in es e im port s h a re of th es e item s in tota l Ch in es e im ports is ju m ped to 41.3% in from 26.3% in Th is in dica tes th a t In dia is progres s ively s ou rcin g im ports of th es e item s from Ch in a th erefore th e im port from cou n tries oth er th a n Ch in a a re now increasingly being replaced by Chinese imports in these selected items. USE BASED CLASSIFICATION As per th e Use-based cla s s ifica tion of IIP (268 item s ), th e im port s h a re of th e Ca pita l Goods is la rges t (8.8% in ), followed by Con s u m er Goods (6.5% a n d in term edia te goods (4.7%), a n d Ba s ic Goods (2.9%) (Table 29. in Annexure). Basic Goods Th e va lu e of th e IIP of Ba s ic Goods h a s grown to in over the base (Table 2). Comparatively the Import Index has grown to du rin g s a m e period. Th e Ch in es e In dex h owever, h a s grown even fa s ter to in over th e b a s e of th a n Im port In dex a n d IIP. Th e s h a re of th e Ba s ic goods item s in th e tota l Ch in es e im port, h owever rem a in a lm os t s ta gn a n t. Ma jor Ba s ic Goods, in term s of va lu e, im ported from Ch in a are Alu m in u m, Copper a n d Copper Produ cts, Alu m in u m Sh eets / Pla tes, Aluminum Foils, Carbon Black, Wires (Copper), and Cement All Kinds. The Ch in a s s h a re in tota l im port to In dia for the C.I. Ca s tin gs, Alu m in iu m Foils, Alu m in iu m wires & extru s ion s, Alu m in iu m sheets/plates, An ilin e, Ca rbon Bla ck, Cem en t All Kin ds, Alu m in iu m, Su lph u ric Acid In cl. Oleum, Copper and Copper Products etc increased considerably in but moderated thereafter. The period, , is of high industrial growth in India wh ich m igh t s u bsta n tia te th a t th e h igh dom es tic in du s tria l growth is increasingly fueled by larger import of basic goods from China. Table 2. Basic Goods Year IIP Index IMP Index Growth IMP Growth Chinese Import Index Share

9 P a g e Capital Goods Th e in dex of ca pita l goods in du s try h a s grown to in over th e ba s e of com pa red to Im p ort in dex du rin g th e s a m e period (Table 3). Th e dom es tic produ ction of th e ca pita l goods declin ed in du rin g th e , the crisis time, however, the imports growth jumped to 43.4%. Later, th e growth of th e im port h owever h a s declin ed to zero in recen t yea r, wh ereb y th e Ch in es e In dex h a s ju m ped con s idera bly over th e ba s e of to in Th e h igh growth in Ch in es e In dex over Im port In dex s ign a ls th a t th e In dia n im port of Ca pita l Goods a re reloca tin g its elf from res t of th e world to China, es pecia lly for th e item s s u ch a s H.T. Insulators, Boilers, Footwear except lea th er, Refra ctory Bricks, Computers, Hea t Exch a n gers, Grinding Wheels, Pa cka gin g Ma ch in ery, Air Con dition er (Pa cka ged), Chillers, Electric Welding Machines, Fibre Optic Cable, Electric Motors Phase-I, Cooling Towers, Printers, Com pu ter Periph era ls, Cranes, Tu rbin es & Acces s ories, Lifts / Eleva tors & Com pon en ts th ereof, Ma gn es ite, Dea d Bu rn t, Cylinders, Prin tin g Ma ch in ery, Sh ip Bu ildin g & Repa irs, In s u la ted Ca bles / Wires a ll Kin d, Sola r Power Sys tem s, Air & Ga s Com pres s ors, Textile Ma ch in ery, Industrial Chains, Agricu ltu ra l Ma ch in ery, UPS/Inverter/Converter, Construction Machine/Equipment, In du s tria l Blowers, Forklift, Tra n s form ers (Sm all), Loaders, DC Motors, Air Brea k Switch es / Circu it, Breakers, An d Generator/Alternator. Table 3. Capital Goods Years IIP IMP Index Growth IIP Growth of IMP Chinese Imports Index Share

10 P a g e Ma in ca pita l goods item s im ported from Ch in a, in term s of va lu e, includes Sh ip Bu ildin g & Repa irs, Com pu ters, Textile Ma ch in ery, Air Con dition er (Pa cka ged), Prin tin g Ma ch in ery, Com pu ter Periph era ls, Boilers, In s u la ted Ca bles / Wires a ll Kin d, Ma ch in e Tools, Con s tru ction Machine/Equipmen, Sta bilis ers, Tu rbin es & Acces s ories, Refra ctory Bricks, Air & Ga s Com pres s ors, Electric Motors Ph a s e-i, Lifts / Eleva tors & Com pon en ts th ereof, Pu m ps (in clu din g power driven p u m ps), Medica l a n d Su rgica l Equ ipm en t (except x-ra y), Sola r Power Sys tem s, En gin es In cl. In tern a l Com bu s tion a n d Dies el, En gin e, Agricu ltu ra l Ma ch in ery, Transformers (Small), Gen era tor/ Altern a tor, UPS/ In verter/ Con verter, Pla s tic Ma ch in ery In cl. Mou ldin g Ma ch in ery, Cra n es, Air Brea k Switch es / Circu it Brea kers, Ch illers, DC Motors, and Electric Motors(Excl. Phase-I). Intermediate Goods Th e va lu e of IIP for in term edia te goods h a ve in crea s ed to in a t th e ba s e of , com pa red to th e im port in dex va lu e of du rin g th e s a m e period (Table 4). Th e im port of in term edia te goods h a ve grown fa s ter th a n th e dom es tic produ ction, a n d th e im ports of in term edia te goods from China have grown even faster than the Import Index. The import item s wh ere th e Ch in a is getting its h old a re Parts Bicycle, Au to An cilla ry & Pa rts, Sodiu m Hydros u lph a te/ Sodiu m, Hydros u lph ite, Glass Sheet, Tou gh en ed Gla s s, Fibre Gla s s, Dyes, Magnets, Plywood, Tin Con ta in ers, Weldin g Rods, Wh iten in g Agen ts, Power Ca pa citors, Graphite Electrodes/Anodes, Stra w An d Pa per Boa rds of All Kin ds, Pla s tic Film Excl. Bopp Film, Steel Stru ctu res, Wood Ven eer, Alu m in iu m Tu bes / Pipes, Glass Bottles, Bea rin gs (Ba ll/ Roller), HDPE Woven Sa cks, Ru bber Ch em ica l, Plastic Sheets, Adhesives, Colou r TV Pictu re Tu bes, Len s of All Kin ds, a n d IC Ch ips & Transistors. Table 4. Intermediate Goods Years IIP Index IMP Index Growth Chinese Import IIP IMPORT Index Share

11 P a g e Th e m a jor im ports from Ch in a, in term s of va lu e, a re Au to An cilla ry & Pa rts, IC Ch ips & Tra n s is tors, Bea rin gs (Ba ll/ Roller), Pa rts Bicycle, Steel Stru ctu res, Stra w An d Pa per Boa rds of All Kin ds, Dyes, Power Ca pa citors, Gra ph ite Electrodes / An odes, Prin ted Circu it Boa rd/ Pla te, Fibre Gla s s, Ma gn ets, Colou r TV Pictu re Tu bes, Syn th etic Ru bber, Ru bber Ch em ica l, Weldin g Rods, Plywood, Adh es ives, Gea r Boxes, Tou gh en ed Gla s s, PVC Res in s, Newsprint, Plastic Sheets, Plastic Film Excl. Bopp Film, and Printing Ink. Consumer Goods Th e va lu e of th e In dex of Con s u m er Goods h a s grown to in over th e ba s e of (Table 5). However, Im port In dex h a s grown rela tively m u ch fa s ter to du rin g s a m e s even yea rs. Th e growth of th e Im port In dex h a s b een fa s ter th a n th e dom es tic produ ction of th e con s u m er goods. Th e va lu e of th e Ch in es e In dex h a s been con s idera bly h igh er th a n IIP a n d Im port In dex. Th e s h a re of th e Ch in es e im ports h a s a ls o ju m ped to 18.8 % in com pa red to ju s t 4.3 % in Th e im ports of Con s u m er Du ra bles Goods is growin g a t m u ch fa s ter ra te th a n even th e oth er u s e ba s ed in du s tries a n d th erefore pu s h in g th e s h a re of Con s u m er Goods in tota l im port from China. Th e item s wh ere th e Ch in a s s h a re in tota l im ports of th e res pective item s is ris in g a re Bicycles, PVC/ Pla s tic Su itca s es, Terry Towel, Calculators, Glucose( powder & liquid), Ru bber Fla ps, Flu ores cen t Tu bes, Lea th er Sh oes, Fans, Ba ttery Ch a rger, Tyre, Tru ck/ Bu s, Mixers & Grin ders, Tube, Cycle/Rickshaw, Tyre, Cycle/ Ricksh a w, Tu be, Tru ck, Teleph on e In s tru m en ts Including, Mobile Ph on e An d Acces s ories, Wood Fu rn itu re, Air Con dition er (Room), Vitamins, Porcela in An d Cera m ic Sa n ita ry, Wa res, Amplifier, Leather Ba gs, Wa llets, Pu rs es, Tyre, Motor Cycle, Pres s u re Cooker, Motor Cycles, Lea th er Ga rm en ts, Tooth Bru s h, Wa s h in g Ma ch in es, Apparels, Incandescent Lamp, Sports Goods, Ru bber, Ra zor Bla des / Sa fety Bla des, Pen s of All Kin d, Gla zed Tiles / Cera m ic Tiles, Tyre, Ca r/ Ca b, Polyth en e Ba gs In cl. Hdpe & Ldpe, Ba gs, Scooter a n d Mopeds, Squ a s h es, J a m s, J ellies, Ketch u ps,etc.,

12 P a g e 12 Ca ttle a n d Pou ltry Feed, Refrigerators, Ma rble Tiles / Sla bs, Cock (Fa u cets ), Syringes, Com pu ter Sta tion ery, Lea th er Gloves, Condoms, Cigarettes, Fruit Juices, PVC Pipes a n d Tu bes, Electric m eter of a ll kin ds, Wa ter m eter of a ll kinds, Clock/ Wa tch / Tim epiece Movem en t, Food Proces s in g Ma ch in ery, Antibiotics & It's Preparations, Elastic Tape, And Toilet Soap. Ma jor con s u m er du ra ble item s, im ported from Ch in a, in term s of va lu e, are Telep h on e In s tru m en ts In clu din g Mobile Ph on e a n d Acces s ories, Air Con dition er (Room ), Tyre, Tru ck/ Bu s, Wood Fu rn itu re, Wa s h in g Ma ch in es, Cock (Fa u cets ), Fa n s, Pvc/ Pla s tic Su itca s es, Tyre, Ca r/ Ca b, Bicycles, Ca lcu la tors, Porcela in An d Cera m ic Sa n ita ry, Wa res, Clock/ Wa tch / Tim epiece Movement, Battery Charger, Refrigerators, Watches, Amplifier, Books, and Tyre, Motor Cycle. Table 5. Consumer Goods Years IIP IMP Index Growth Chinese Import IIP IMP Index Share Table 6. Correlation Coefficients of the Growth Rates Capital Goods Basic Goods Intermediate Goods Consumer Goods Over All Import Index Chinese Index The correlation coefficient (see Table 6) is used as to identify the direction of th e co-m ovem en t in th e growth ra tes of th e dom es tic produ ction a n d th e im ports. Th e pos itive s ign of th e coefficien t in dica tes th a t th e im port growth a n d dom es tic produ ction growth is m ovin g togeth er in th e s a m e direction. On e ca n in fer from th e s a m e direction a l co-m ovem en t of th e growth ra tes th a t th e dom es tic produ ction a n d th e im port s eem to be com plem en ta ry, a n d n ot s u bstitu te. Rega rdin g th e ca pita l goods a n d th e Con s u m er goods th e correla tion is pos itive between im port in dices a n d th e dom es tic produ ction in dices. However, th e correla tion rega rdin g overa ll IIP, ba s ic Goods a n d

13 P a g e 13 in term edia te Goods is n ega tive, s h owin g th a t th e growth of th e dom es tic produ ction is m ovin g in oppos ite direction to th e im port growth. Sin ce th e Ch in es e In dex is h igh er th a n th e IIP, th e n ega tive correla tion coefficien t s h ows th a t th e im port in Ba s ic Goods a n d In term edia te Goods a re n ega tively im pa ctin g th e dom es tic m a n u fa ctu rin g produ ction in th es e grou ps. Th e m a n u fa ctu rin g growth ra te a ls o s eem s to be a dvers ely a ffected du e to a dvers e impact of the growth Basic and Intermediate goods. INDUSTRY SUB-GROUPS Manufacture of food products and Beverages Th e IIP value of food Produ cts & Bevera ges h a s grown to in over th e ba s e of com pa red to Im port In dex to a n d export in dex du rin g th e s a m e period (Table 7). Th e va lu e of th e Ch in es e In dex h a s been s ign ifica n tly grown to in over ba s e, com pa red to IIP a n d th e Im port In dex. Th is in dica tes th a t th e im port from Ch in a in th is s u bgrou p of in du s try h a s in crea s ed trem en dou s ly in pa s t s even yea rs. Th e item s m a in ly s ou rced from Ch in a, in term s of s h a re in tota l im ports of th e item in In dia, a re Glucose (powder & liqu id), Squ a s h es, J a m s, J ellies, Ketchups, etc., Cattle and Poultry Feed, and Fruit Juices. Top five item s im ported from Ch in a, in term s of th eir va lu e, a re Industrial Alcoh ol(rectified/ Den a tu red Spirit), Ca ttle a n d Pou ltry Feed, Glu cos e(powder&liqu id), Fru it J u ices, In dia n m a de Foreign Liqu or, Squ a s h es, Jams, Jellies, Ketchups,Etc.. Table 7. Manufacture of food products and Beverages Years IIP Index IMP Index EXP Index IIP Gr. IMP Gr. EX G Chinese Imports Index Growth Share Manufacture of Tobacco Products

14 P a g e 14 Th e IIP of Toba cco in crea s ed to ju s t five percen t in com pa red to , wh ile export h a s grown by fifty five percen t a n d im port by m ore th a n fou r tim es in pa s t s even yea rs (Table. 8). Th e im port of Toba cco from Ch in a is on a decline during past six years. Cigarette is the main item in this category of import from China. Table. 8 Manufacture of Tobacco Products Years IIP Index IMP Index EX Index IIP Gr. IMP Gr. EX G Chinese Imports Index Growth Share Manufacture of Textiles Th e Textile is export orien ta ted in du s try. Th e va lu e of IIP for textiles h a s grown almost equal to the Export Index in over the base of to 155 (Table 9). However, the Import Index surged during the crises year of , to 248, a lth ou gh it h a s declin ed th erea fter to Th e Ch in es e In dex a ls o ju m ped to in a lon g with th e s h a re of in du s try in tota l im ports from Ch in a to 0.03%. However, th e im port from Ch in a h a s declin ed from on wa rds. Ma in im port item s, in term s of va lu e, from Ch in a a re Terry Towel and Elastic Tapes. Table 9. Manufacture of Textiles Years IIP Index IMP Index EX Index Chinese Imports IIP Gr. IMP Gr. EX G Index Growth Share Manufacture of wearing Apparel; Dressing and dyeing of fur Th e va lu e of th e IIP for wea rin g Appa rel; Dres s in g a n d dyein g etc. h a s in crea s ed to 120 in over th e ba s e of (Table 10). Th ere is a

15 P a g e 15 declin e in th e produ ction s in ce in th is s egm en t. Th is is m a in ly on accou n t of th e declin e in th e export growth in th is s ector du rin g pa s t th ree yea rs except At th e s a m e tim e va lu e of th e Im port In dex h a s grown to over the base of The Chinese import are growing at much faster ra te th a n res t of th e cou n tries, Ch in es e In dex in crea s ed to in over the base of The declining domestic production may be the cause of th e declin e in th e export. Bu t th e s u rge in im p ort from Ch in a is certa in ly a ca u s e of con cern. Th e Ch in a s im port s h a re in tota l im port of Appa rels a n d Lea th er Ga rm en ts h a s ju m ped to 39 % a n d 43 in com pa red to ju s t 17 % a n d 1 8% res pectively. Th is ind icates th at the Ch inese im port h as been replacing th e im port from other coun tries over th e tim e in th es e s ubgrou p com m od ities. Table 10. Manufacture of wearing Apparel; Dressing and dyeing of fur Years IIP Index IMP Index EX Index IIP Gr. IMP Gr. EX G Chinese Imports Index Growth Share Tanning and Dressing of Leather Th e dom es tic produ ction of lea th er In du s try is growin g a t a s low pa ce s in ce , a n d it h a s declin ed du rin g (Table 11). Th e growth of domestic production of this sector seems to be correlated to the export growth. Table 11. Tanning and Dressing of Leather Years IIP Index IMP Index EX Index IIP Gr. IMP Gr. EX G Chinese Imports Index Growth Share

16 P a g e 16 Com pa red to dom es tic produ ction th e im port in th is s ector h a s been growin g a t a rela tively h igh er ra te except in recen t yea r. Th e im port from Ch in a h a s declin ed du rin g followin g th e declin e in th e dom es tic production. Ma in item s of im port, in term s of va lu e, from Ch in a a re Footwea r except lea th er, Lea th er Sh oes, Ta n n ed or Ch rom e Skin s a n d Lea th ers, Lea th er Ba gs, Wa llets, Pu rs es, and Leather Gloves. Manufacture of wood and wood products Th e va lu e of th e IIP for Woods & Woods produ cts h a s in crea s ed to in over th e ba s e of com pa red to shrinking Export Index of ju s t 57.7 du rin g th e s a m e period (Table 12). Th e growth of IIP has declin ed during past three years. The growth of the export is also declining continuously during pa s t fou r yea rs. Th e Import In dex h owever, h a s ris en to a n d its growth h a s been very h igh a n d pos itive in a ll s even yea rs except Th e Ch in es e In dex h a s been even h igh er th a n th e Im port In dex. Th e dom es tic produ ction m igh t be u n der s tres s du e to en viron m en ta l regu la tion etc.. Main items of Import from China are Plywood, Wood Veneer and Particle Boards. Table 12. Manufacture of wood and wood products Years IIP Index IMP Index EX Index IIP Gr. IMP Gr. EX G Chinese Imports Index Growth Share Manufacture of paper and paper products The IIP for pa per & pa per produ cts h a s grown by 36 % in com pa red to , and annual growth of IIP h a s been low es pecia lly du rin g a n d n ega tive in (Table 13). Su rpris in gly th e beh a vior of th e export growth in th is s ector h a s been qu ite con tra s tin g to th e growth of th e dom es tic produ ction. Th e Ch in es e im ports a re con tra ctin g du rin g pa s t two years. Ma jor item s of im port from Ch in a a re Stra w a n d Pa per Boa rds of All Kin ds, News prin t, Writin g & Prin tin g Pa per, Cra ft Pa per (Kra ft Pa per), Pu lp Rayon Grade, Computer Stationery.

17 P a g e 17 Table 13. Manufacture of paper and paper products Years IIP Index IMP Index EX Index IIP Gr. IMP Gr. EX G Chinese Imports Index Growth Share Publishing, printing and reproduction of recorded media The value of the IIP of this industry sub group has grown to 132 in at the base of , and the growth has been quite low during past three con tin u ou s yea rs (Table 14). Th e va lu e of th e Export In dex in th is s ector h a s grown to in Th ere is h owever, con tin u ou s declin e in th e im port s in ce except in wh ich th ere is a s u dden ris e in im port. Th e growth of im port from Ch in a h a s been qu ite h igh except Th e im port surge in s eem s to be from cou n tries oth er th a n Ch in a. Th e on ly item imported from China under this category is Books. Table 14. Publishing, printing and reproduction of recorded media Years IIP Index IMP Index EX Index Chinese Imports IIP Gr. IMP Gr. EX G Index Growth Share Manufacture of Coke, refined petroleum products and nuclear fuel Ca rbon Bla ck is th e on ly produ ct con s idered for th e a n a lys is u n der th is subgroup of in du s try a n d wh ich is a pa rt of 268 DIPP item s (Table 15). Th e dom es tic produ ction of th e p rodu ct h a s in crea s ed ju s t by 15 % in la s t s even yea rs. However, th e export h a s in crea s ed by 92 % a n d im port by 74 % respectively in com pa red over Th e m a s s ive im port from

18 P a g e 18 Ch in a s eem s to pu t ch a llen ge before th e dom es tic in du s try. Bla ck Ca rbon m a rket bein g oligopolis tic in In dia s eem s to be fa cin g problem of du m pin g of the cheap product from China. Table 15. Manufacture of Coke, refined petroleum products and nuclear fuel Years IIP Index IMP Index EX Index IIP Gr. IMP Gr. EX G Chinese Imports Index Growth Share Manufacture of Chemical and chemical products The IIP in th is s egm en t of in du s try h a s grown con s is ten tly du rin g pa s t s even yea rs. Th e va lu e of th e IIP h a s grown to in com pa red to (Table 16). During the same years the Export Index reached to highest in , before it declin ed to in Th e Im port In dex h owever, is growin g a t fa s ter ra te a n d rea ch ed levels in Th e growth of the Chinese Index seems to be even faster than the Import Index. The m a jor item s imported, in term s of va lu e, from Ch in a a re Dyes, Vita m in s, Syn th etic Ru bber, Ru bber Ch em ica l, Adh es ives, PVC Res in s, Prin tin g In k, Aniline, and Sodium Hydrosulphate/Sodium Hydrosulphite. Table 16. Manufacture of Chemical and chemical products Years IIP Index IMP Index EX Index IIP Gr. IMP Gr. EX G Chinese Imports Index Growth Share Manufacture of rubber and plastic products

19 P a g e 19 The IIP of Ru bber & Pla s tic in du s try grou p has in crea s ed by 74.5 % in com pa red to , wh erea s th e Export In dex h a s grown by 48 % and Import Index by a massive 3155 % during the same period (Table 17). The growth of export h a s been n ega tive in a n d Th e Ch in es e In dex is growin g a t m ore th a n 200% a n d 3 00% in a n d res pectively, followin g a declin e th erea fter. Som e of th e m a jor item s im ported from Ch in a a re Tyre, Tru ck/ Bu s, PVC/ Pla s tic Su itca s es, Tyre, Ca r/ Ca b, Plastic Sheets, Plastic Film Excl. Bopp Film, Rubber Transmission And V Belts, HDPE Woven Sacks, Tyre, Motor Cycle, Tube, Truck, a n d Plastic Bottles. The item s m a in ly s ou rced from Ch in a a re Pvc/ Pla s tic, Su itca s es, Ru bber Fla ps, Tyre, Tru ck / Bu s, Tu be, Cycle/ Ricksh a w, Tyre, Cycle/ Ricksh a w, Tu be, Tru ck, Tyre, Motor Cycle, Tyre, Ca r/ Ca b, Pla s tic Film Excl., Bopp Film, Polythene Bags, Incl. Hdpe & Ldpe, Bags, and HDPE Woven Sacks. Table 17. Manufacture of rubber and plastic products Years IIP Index IMP Index EX Index IIP Gr. IMP Gr. EX G Chinese Imports Index Growth Share Manufacture of other Non-metallic Mineral Products The IIP of n on -m eta llic m in era ls h a s in crea s ed to in compared to (Table 18). The IIP has grown at average of 8.0 %, except , wh en th e growth of IIP d eclin ed to les s th a n on e percen t. Th e s lu ggis h growth in th e IIP h a s a ls o led to declin e in th e export of th is s egm en t. Vis ible lin ka ge of produ ction a n d export of th is s ector rein forces th e export depen den cy. Th e Im port In dex h a s grown to 650 over th e ba s e of com pa red to Ch in es e In dex in over th e ba s e of Rela tively h igh growth of th e Ch in es e im port over res t of th e cou n tries s ign a ls that the Chinese import is replacing the import of non-metallic minerals. Th e item s wh ere Ch in a is repla cin g oth er cou n tries a re H.T.Insulators, Refra ctory Bricks, Gla s s Sh eet, Tou gh en ed Gla s s, Porcela in a n d Cera m ic,

20 P a g e 20 Sa n ita ry Wa res, Fibre Gla s s, Ma gn es ite, Dea d Bu rn t, Gla zed Tiles / Cera m ic, Tiles, Glass Bottles, and Marble Tiles/Slabs. Major items imported, in terms of value, from Ch in a a re Refra ctory Bricks, Fibre Gla s s, Tou gh en ed Gla s s, Porcela in An d Cera m ic Sa n ita ry Wa res, Ma gn es ite, Dea d Bu rn t, Cem en t All Kinds, Glass Sheet, Glass Bottles, H.T.Insulators, Marble and Tiles/Slabs. Table 18 Manufacture of other Non-metallic Mineral Products Years IIP Index IMP Index EX Index IIP Gr. IMP Gr. EX G Chinese Imports Index Growth Share Manufacture of Basic Metals Th e IIP for th e ba s ic m eta ls h a s grown to in com pa red to export in dex of a n d im port in dex of over th e ba s e of (Table 19). Th e s h rin kin g export of th e ba s ic m eta ls in is followed by declin e in th e dom es tic produ ction in Th e growth of th e im port h a s a ls o been very h igh except The im port of Bas ic Metal form Ch in a is grow in g at m u ch fas ter rate th an th e im port from oth er coun tries, w h ich is an oth er in s tan ce of Chinese imports replacing the imports from other countries. Table 19. Manufacture of Basic Metals Years IIP Index IMP Index EX Index IIP Gr. IMP Gr. EX G Chinese Imports Index Growth Share