India to benefit from US-China trade tension

16 Oct 2018

trade warIndia is to be on an upward trajectory in exports amid the trouble surrounding the China-US trade tariffs.

The Trump administration had slapped on 10% tariffs on Chinese products, with the figure expected to grow to 25% by year end. China then responded by imposing taxes on 5,207 US products valued at around $60 billion.

Rakesh Kumar, Executive Director, Export Promotion Council for Handicrafts (EPCH), said at the press meet of the IHGF-Delhi Fair Autumn 2018: “The government intention in the US now is no more pro-China. That is the reason why Americans are now not keen to invest in China. At the same time, they also have to find other sources of the market where there is a new product as well as acceptability of the consumers. This is where India comes in as the other market after China which can give as much content, design and variety.”

Industry body, the Confederation of Indian Industry (CII), in its report on ‘New Export Opportunities for India in Trade with US and China’, also pointed out that India should focus on the US market for items related to machinery, electrical equipment, vehicles and transport parts, chemicals, plastics and rubber products.

According to The Economic Times, the chamber identified 818 product lines where the US had raised tariffs for Chinese imports. These also include some of the top exports from India to the US, which are pumps, parts of military aircraft, parts for electrodiagnostic apparatus, passenger vehicles of 1500-3000 cc, valve bodies and parts of taps. In 2017, the export of these items stood at $50 million in 2017 and is likely to increase.

The devaluation of the Indian rupee will also be working in India’s advantage in this situation, according to Kumar. “The 12-13% devaluation will help us in two ways. Firstly, handicraft is not dependent on any import content. It is a 100% net foreign exchange earner. Secondly, since buyer comes with a budget, he is able to procure more items. The new customer will find it cheaper,” he said.