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.
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 further improve business environment by halving time required to open a business, State Council decided at an executive meeting chaired by Premier Li Keqiang on May 2nd. #China’s door to the outside world will open wider. #Indian businesses are welcome!— Luo Zhaohui (@China_Amb_India) May 3, 2018
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.
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.
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.