02:09 GMT11 May 2021
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    New Delhi (Sputnik): India has upped the ante against Chinese imports in the wake of border tensions. Restrictions have been imposed on power tillers, steel, and bamboo imports to insulate domestic industries against cheap imports. Apart from direct foreign investment, New Delhi has also barred China from Indian public procurement contracts.

    At a time when India is imposing trade restrictions one after another, the former vice chairman of a major Indian government think tank, Niti Aayog, has hinted that import protection will make Indian companies less competitive on the global market.

    Economist and former Niti Aayog Vice Chancellor Arvind Panagariya, in an article for the Indian daily Economic Times, has said the country is making "policy mistakes" in the area of international trade.

    Arguing that the gains made on the reform front in last six years are being "considerably limited" due to our policy mistakes on international trade, Panagariya – who is currently a professor of economics at Columbia University, said: "We are deviating from the road of steady liberalisation that we had adopted in 1991. We travelled on this road until 2007, stopped, and have now taken a U-turn to begin travelling in the reverse direction".

    The reforms that Panagariya mentions in his article are the Goods and Service Tax, Insolvency and Bankruptcy Code, and direct benefit transfer brought about by Indian Prime Minister Narendra Modi's government in last six years.  

    Calling for a reconsideration of trade policy, Panagariya argued in that, "I have no doubt that eventually India will transform itself into a modern, urban industrial economy. The critical question is whether we want to do it in 100 years or more, as most western economies did or in 2-3 decades as the economies of South East Asia have done? If the latter, we need to reconsider our trade policy".

    In the wake of a border dispute with China, India has taken a number of trade protection measures to safeguard Indian industries from an influx of cheap Chinese imports.

    India is also reworking its trade deals with the South East Asian nations to ensure that China does not use them as a proxy for pushing its exports to India.

    Panagariya, meanwhile, goes on to argue in his article that import protections will not make Indian companies competitive on global markets.

     "When we give up openness and use import protection to help our firms withstand foreign competition, we are not addressing the fundamental source of the disability. It will not make them competitive in the global economy", Panagariya added.

    Since the onset of the border dispute with China in April of this year, Delhi has taken a number of measures including banning over a hundred mobile applications owned by Chinese firms and imposing tariff restrictions on Chinese imports. Major Chinese apps such as TikTok and the UC Browser have been banned as well. 

    After restricting Chinese foreign direct investment in April, India took additional measures to restrict Beijing's participation in public procurement projects.

    As for trade, India has restricted imports of televisions from China, imposed tariffs on agricultural tillers, and extended an anti-dumping duty on certain varieties of steel.


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