“Spoke to my friend President Trump and congratulated him on the success of the historic Gaza peace plan. Also reviewed the good progress achieved in trade negotiations. Agreed to stay in close touch in the coming weeks.”
That post from Prime Minister Narendra Modi’s X handle confirmed that it’s not all gloom and doom on the India-US front, and that the two sides continue to talk on Trump’s 50% tariffs on Indian goods.
Did the Chinese anticipate this? Check out this news story in The Pharma Letter, a London-based publication providing news and analysis of the global pharmaceutical and biotech industries.
China unlocks $15 billion market for Indian pharma with tariff cut, ran the headline of a report dated dated Oct 6. The report said:
“China has announced the immediate removal of the 30% import duty on Indian pharmaceutical products… the Chinese policy shift is expected to redirect up to 30% of India’s US-bound pharma shipments towards China.”
It noted the timing of China’s announcement, that India’s $50 billion pharma export sector is “battling a steep 100% tariff on branded and patented drug imports imposed by the US.”
Abhijit Das, who specialised in trade issues during his years in government, told StratNewsGlobal that “China is positioning itself ahead of a possible meeting between Modi and Trump later this month.
“While there is no word as yet to suggest a meeting will happen in Kuala Lumpur, Malaysia, the Chinese would like to preempt that possibility and the likelihood of a breakthrough in their relationship, especially over US tariffs on Indian goods.”
In his view the Chinese move to cut import duties is good for India but do note that Indian pharma buys a lot of precursors from China that are processed into medicines of various kinds.
Opening up of the Chinese market will help India’s domestic pharma industry, but does that also spell greater dependence on an opaque, unpredictable and adversarial nation?
Das believes China may also be signalling its readiness to address India’s ballooning $100 billion trade deficit with that country. India has accused of China using tariff and non-tariff measures to keep Indian products out and has demanded a level playing field, but to no avail.
The Chinese announcement comes ahead of Russian President Putin’s direction to his government to boost the import of Indian drugs. The Pharma Letter notes “a high-level bilateral meeting late last month between JP Nadda, India’s health minister and Nikolai Patrushev, deputy prime minister of the Russian Federation.”
Better times on the horizon for Indian pharma it would appear, but as the Chinese have demonstrated so many times in the past, there are no free lunches.
China could demand something else in return, less barriers to its goods, freer flow of Chinese investments in sectors India may consider strategic, maybe even a free trade agreement at a time when India has sealed two and is negotiating for at least two more (US, Europe).
Last month, Commerce Minister Piyush Goyal was quoted in the media as saying, “I will allow time to take a decision (on Press Note 3 changes). I will not preempt what will happen in the future.”
Press Note 3 was implemented in April 2020 following the Galwan Valley clashes between India and China. It was aimed to prevent any “opportunistic takeover or acquisition” of Indian companies especially those in strategic sectors (defence, telecom, digital etc).”
Commerce Ministry officials were quoted by Moneycontrol as confirming that “The government is considering changes in certain sectors, particularly solar, and those where the domestic industry has sought relaxations. The focus is to balance investment inflows while safeguarding sensitive areas.”
FDI norms for sectors like IT and data-driven services are also being examined to ensure there are no strategic or security risks before opening up further, Moneycontrol reported. The green signal will come from the prime minister.
Thirty eight years in journalism, widely travelled, history buff with a preference for Old Monk Rum. Current interest/focus spans China, Technology and Trade. Recent reads: Steven Colls Directorate S and Alexander Frater's Chasing the Monsoon. Netflix/Prime video junkie. Loves animal videos on Facebook. Reluctant tweeter.
