BIS Norms, Non-Tariff Barriers and Strategic Interventions Keep Domestic Sectors Resilient
India’s growing stature in global manufacturing is unlikely to be undermined by the renewed threat of Chinese dumping, even as global concerns around excess capacity surge, says Vikas Khemani, founder of Carnelian Asset Advisors. In a recent interview with N Mahalakshmi on the program Wealth Formula, Khemani highlighted the proactive policy approach adopted by the Indian government as the key bulwark against external trade risks.
Khemani noted that Chinese overcapacity is not a new phenomenon. “China has always had overcapacity—they could have dumped earlier too,” he remarked. “They were not able to, not because the capacity wasn’t there, but because of India’s policy approach.” According to him, strategic use of BIS standards, non-tariff barriers, and other protective mechanisms has ensured Indian industries remain shielded while creating conditions for long-term competitiveness.
Highlights:
India unlikely to face dumping risks due to smart policy safeguards.
Government uses non-tariff tools like BIS certification norms to shield sectors.
Domestic manufacturing boosted across sectors like footwear and toys.
Sectoral Success Stories: Footwear, Toys, and Beyond
Providing concrete examples of how the Indian policy environment has fostered domestic industry growth while countering unfair trade practices, Khemani pointed to sectors like footwear and toys. The government’s aggressive push for BIS certification compliance in these sectors has drastically curtailed imports, offering local manufacturers space to scale operations and build capacity.
“In Tamil Nadu, every large company is now setting up sports footwear manufacturing plants. That’s creating huge employment,” Khemani observed. He added that the government is not just protecting industry blindly but is strategically nurturing capabilities, enabling companies to compete globally over the long term.
Highlights:
BIS norms helped reduce import dependency in footwear, toy industries.
Indian manufacturing scaling up with large investments and job creation.
Localized capacity-building seen as key to resisting dumping threats.
Historical Dumping and Policy Calibrations: A Strategic Trade-Off
When asked about historical episodes where Indian industries—including steel and ceramics—suffered due to Chinese dumping, Khemani took a nuanced view. He argued that these were not failures of policy, but rather calculated decisions taken by the government to send signals to specific sectors.
“If at that time there was no protection for steel, that was a message to Indian steel industry,” he said. “The government takes a very consolidated approach — it’s not that they are deciding in isolation.” He emphasized the importance of avoiding excessive protectionism that could breed inefficiency. However, in the current geopolitical and economic climate, Khemani affirmed that the government is likely to err on the side of protecting domestic industry.
Highlights:
Past dumping events reflected calibrated policy choices, not oversight.
Government seeks balance between protection and competitiveness.
Excessive protectionism avoided to sustain long-term efficiency.
India’s Growth Momentum and Global Market Share Gains
Khemani expressed confidence in India’s continued domestic growth trajectory, even in the face of global slowdown and rising overcapacity in China. He believes that Indian companies will not only remain insulated from dumping-led profit shocks but are also positioned to gain market share globally.
“India will gain market share. So we will have good enough growth. And hence, Indian capex will not go out,” he said, underscoring his optimism in capital expenditure continuing to flow into Indian industrial sectors.
From an investor’s perspective, Khemani dismissed the notion of a broad-based earnings risk due to external trade threats. Instead, he envisions India’s strategic positioning and strong policy fundamentals driving long-term earnings resilience and sectoral expansion.
Highlights:
India poised to gain global market share, avoiding earnings risk.
Capex momentum expected to continue across domestic industries.
Dumping threats unlikely to derail long-term investment outlook.
Fed Cuts Could Spur Global Infrastructure Revival
Looking beyond domestic dynamics, Khemani also discussed the broader global macro landscape, particularly the potential rebound in global investment activity once the US Federal Reserve resumes rate cuts. He forecast that a Fed rate in the 2–3% range could catalyze a revival in US infrastructure spending, which would ripple through global markets.
“It may take two to three quarters of pain before it begins, but the path is clear,” Khemani said, referring to a likely lag before rate cuts translate into real economic impact.
Highlights:
Fed rate cuts to revive global infrastructure investment.
India well-placed to benefit from global capex revival.
Long-term bullish stance maintained across domestic manufacturing and export sectors.
