New Delhi: The recent skirmish between India and China has given rise to a situation where it is seen that in India, voices to boycott China are rising day by day and there have been protests all across the country condemning the brutal act by the Chinese troops that left 20 Indian army personnel dead.
India’s trade dependency on China is huge. Being one of the leading trade partners of India, China’s share in India’s total export and import are 9% and 18% respectively in 2019 -20.
But the trade ties and geopolitical set up of the country is going to witness a massive change as China has betrayed India in many ways. The outbreak of the pandemic has taken the world by storm creating a huge impact on the global economy following the violent face-off in the LAC has compelled India to ban trade ties with China.
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A good number of key sectors dependent on Chinese goods for critical inputs risk collateral damage.
Among the many sectors, the pharmaceutical industry which is highly dependent on China for imports would be affected the most. Although India has announced a new policy to become more self-reliant in drugs, expert says it will take ample time.
Speaking to ETV Bharat, Ashok Kumar Madan, Executive Director with Indian Drug Manufacturers Association said, “India is importing 70% of requirements from China for Active Pharmaceutical Ingredients (API’s) and when it comes to antibiotics, India’s dependency on China is around 90%.
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Currently, we are concerned that the goods are not being cleared that will lead to demurrages and impact on certain companies which has an immediate requirement of API’s which in turn would impact the export or domestic market. Goods are at the port and this is impacting the production of export".
“India’s pharmaceutical industry has no alternates because even if we spend more money, we will not get the same material from other sources. We may get some materials from Europe at a higher price but they may not be able to cater to the need because India’s requirement would be much bigger than what extra capacities they may generate”, Madan points out.
Indian drug makers are heavily dependent on China for API. Nonetheless, an import ban on Chinese pharma-related products may lead to supply chain disruptions for Indian firms.
“Pharma is different from other sectors and it is very much dependent on China. Two- thirds of the entire global market are in the hands of China in terms of chemical goods and almost 65-70 percent of API’s key starting materials used in drugs are imported from China. Currently, we have commitment and export obligations to Indian pharma companies”, further said Ravi Uday Bhaskar Director General, Pharmexcil.
He says, “However, as of now, there is no alternative to China but to reduce the import dependency, the government is coming up with schemes to support the Pharmaceutical industry including a cluster programme under which the Government will provide Rs 1,000 crore to each cluster. But, the step will take some time".
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The government has recently amended the export policy of hydroxychloroquine API and its formulation, lifting the export ban on them. India is the largest producer and exporter of hydroxychloroquine globally, an old and expensive treatment for malaria. The country manufactures 70 percent of the world’s supply of hydroxychloroquine.
“India’s Pharma industry has enough stocks for 2-3 months but there is a need to think for an alternative, in case if India is going self -reliant then it is a very difficult proposition for the time being. It may take at least 8-10 years’ time if we keep on consistently working towards the target.
Besides API, we require key starting materials which are imported from China. Not only India, but every other country which produces pharma are also dependent on China and the U.S is no exception. There is no escape from the reality and if we try to become self-sufficient, it is very important to widen our supply base”, adds Madan.
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China is India’s second-largest trading partner after the US and according to reports, it accounts for nearly 12% of India’s imports across sectors such as chemicals, automotive components, consumer electronics and pharmaceuticals.
According to JM Financial Institutional Securities Ltd, Indian drug makers import 70% of API, the requirement from China with imports from the country increasing steadily over the years from about 62% in FY 12 to about 68% in FY 19 and an import ban on China may lead to adverse price movements, increasing costs for domestic firms.
It is worth noting that on Monday, India banned 59 apps with Chinese links saying that they were prejudicial to sovereignty, integrity and security of the nation.
