by Harish Gupta, National Editor, Lokmat Group
PM Clears action against Nepal, China
Budget hits two neioghbours hard
Harish Gupta
New Delhi, Feb 2
Prime Minister Modi has sent clear signals to two neighbouring countries clearly in the Budget 2020-21 presented by Nirmala Sitharaman on Saturday last – Nepal and China- that it can’t be business as usual.
If the financial assistance to Nepal has been cut as much as by one third during 2020-21 Budget, import duty on cheap finished goods from China has been raised hugely.
It seems his honeymoon with China is also over and except for sweet talking, Modi has decided to take full advantage of the out-break of deadly Coronavirus as the world is suspending businesses. The slapping of huge customs duty on 300 plus items may help the Indian domestic industry. But China will suffer the most as imports will be hit. In the process, the government hopes to mop up import duty during the 2020-21 as much as Rs 1.38 lakh crores. It seems Modi has joined hands with US President Donald Trump in curtailing growth of Chinese economy and take advantage of Coronavirus when the world is shunning the Chinese dragon.
No doubt, raising Customs Duty is aimed at helping MSMEs in the country as dumping from China has been hurting them. This will boost domestic industry, local employment and eventually impact GDP. But it’s a big move on the part of government sitgnaling the end of financial honeymoon.
If Nepal decided to join hands with China in a big way, India has cut financial assistance to Nepal during 2020-21 as much as 33%. Nepal saw a cut of Rs four billion from the Rs 12 billion that it received in the previous fiscal year from India. Nepal had received around INR 7.63 billion in fiscal year 2018-19. However, the assistance was raised to as much as Rs 12 billion during 2019-20 as PM Modi wanted very close relationship with Nepal. But during 2020-21, Nepal saw a biggest cut in the allocation though it will still be a recipient of the third largest Indian assistance i.e. Rs 8 billion.
Prime Minister Modi has also told the Finance Ministry to review Rules of Origin requirements, particularly for certain sensitive items, to “ensure that Free Trade Agreements (FTAs) are aligned to the conscious direction of “Make in India or Assemble in India.
Imports under Free Trade Agreements (FTAs) are on the rise. Undue claims of FTA benefits have posed threat to the domestic industry. Such imports require stringent checks.
