China says pharma-tariffs' removal will profit India, but will it?
Days after PM Narendra Modi's visit, China has announced it is removing import duties on 28 medicines effective May 1, a move that officials say will boost India's access to the market. "This will help reduce trade imbalance between China and India," Chinese Ambassador to India Luo Zhaohui said; India's 2017-18 trade deficit with China stood at $62.8bn. However, the industry isn't very hopeful.
Details about China's latest move
This decision follows a State Council meeting on April 12. A post-meeting statement said import tariffs on pharmaceuticals like cancer drugs and imported traditional Chinese medicine will be exempt. "The authorities will reduce prices of cancer drugs through centralized government procurement and eliminate premium-prices by means of cross-border e-commerce. Imported innovative drugs will be incorporated into the catalogue of medical insurance reimbursement," it said.
China will also halve time required to open a business
Along with bilateral trade, the deficit too has been growing
Beijing's move comes even as India-China bilateral trade touched a historic high of $84.44bn last year. This included a 40% increase in Indian exports to China, totaling $16.34bn. However, trade deficit too remains high, registering a year-on-year growth of 8.55% in 2017. Delhi has been pushing Beijing to open opportunities to reduce this widening gap by easing India's pharmaceutical, IT and agricultural exports.
China assured India's concerns will be addressed
Last month, at the Joint Economic Group (JEG) meeting in New Delhi, Chinese Commerce Minister Zhong Shan acknowledged India's concerns and committed to addressing them according to the JEG's broad framework and the Five-Year Development Program for bilateral economic cooperation.
But does the latest move follow its promises?
Market insiders are skeptical about gains to India. That China has exempted mostly cancer drugs signals the move is aimed at the US, a bigger producer, says DG Shah, Secretary General, Indian Pharmaceutical Alliance. A bigger hurdle for India is non-tariff barriers, stakeholders claim. At least one government official agrees. "However, a new beginning has been made, and it's a good thing," he added.
