As US-China Trade War Continues, India Looks to Capitalize

With the US tariffs on an additional $200 billion of goods from China coming into effect at the start of this week, India is looking to increase exports of similar products to take advantage of the situation. While the current tariff on this lot of items is 10%, the rate will go up to 25% in January 2019 if there is no mutual consensus on trade achieved between both nations. India sees this as an opportunity because some of the items that have come under this tariff regime will now be price competitive to those produced in the country, making them a viable alternative for the US market.

Speaking to The Mint on condition of anonymity, an official from the Commerce Ministry said, “There are items such as electricity parts and switches which small-scale industries produce in India. We have become cost-competitive in such items, but we don’t have the production capacity. Nobody would like to expand capacity through fresh investments, as we don’t know how long these sanctions will last.” The official added, “There are a lot of items that we need to identify and push for them. We are talking to our exporters through the export promotion councils and pushing them to increase exports to the US.”

India too was poised to impose retaliatory tariffs on US products when the US slapped tariffs on Indian steel items. However, these have been deferred, and at the moment, both countries are attempting to work out a trade package that is beneficial to both.