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Modi Govt has started reviewing Electronic and IT imports from China, BIG Action soon to correct the Trade Imbalance

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The government has started a review of the massive import of electronics and information technology products from China due to concerns over security and data leakages+ . There has been a growing clamour for import restrictions and other curbs on such products, which currently constitute a huge chunk of shipments from across the border. The review comes at a time when the India-China standoff over Doklam has been intensifying, and may signal the onset of a strategic trade war as tension on the border worsens and concerns about trade imbalances and security increase.

The growing engagement of Chinese companies within India’s burgeoning electronics and IT industry — worth nearly $22 billion, according to a recent study by industry chamber CII— has sounded alarm bells within the government, especially as it is felt that much of this can be used to gain unlawful access to critical information about individuals, businesses, and government set-ups.

“There are increasing concerns about the preparedness of the security apparatus, especially as there are fears that electronics, online trade platforms, and finished goods can be tapped into for procuring sensitive information,” industry sources said. “Communication has already been sent to industry players for their views and assess their preparedness in protection of data and critical information.” The Indian government’s movement towards digitalisation of services and trade and the manifold increase in online transactions has also added to security concerns, which have reached the highest echelons of government.

IT and law minister Ravi Shankar Prasad recently held a top-level meeting to assess the situation with regard to the Chinese engagement in India’s electronics and IT sector, according to sources. Prasad is understood to have asked ministry officials to make an assessment of India’s vulnerability when it comes to goods from China.

Chinese companies have become almost a backbone to India’s massive requirements in the manufacturing of electronics, especially when a large part of the critical components and finished goods are imported. These include components for products such as mobile phones, medical equipment, telecom network gear and devices and sensors linked to the Internet of Things (IoT). Also, major Chinese companies hold substantial stakes in some of the country’s largest online marketplaces.

“Many of the devices transmit, or store, data back into Chinese servers, which could pose a security risk. Also, online transactions using many of these devices and platforms can be tracked back to Chinese servers, which can create security issues for the country at a time of heightened tension on the border,” one source said.

India’s large and uneasy trade imbalance with China is another trigger for the exercise. It is felt the government should focus, “and insist”, on faster indigenisation to tackle the issue. India had a trade deficit of nearly $52 billion with China last fiscal, and the country is now seeking greater market access in the neighbouring country for its products and services.

On the electronics front, the government has been pushing hard to increase local manufacturing by introducing benefits for manufacturing in India. The “Make in India” policy has been focusing on this aspect, and Prasad has said the government expects the turnover of the digital, communications and IT industry to grow nearly fourfold to $1 trillion by 2022 against $280 billion currently.
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