India can benefit from ongoing Sino-US trade dispute to increase exports to China
With China announcing plans to put tariffs of up to 25 percent on $60 billion of US goods, certain Indian products may become more competitive in the Chinese market. This will probably offer a chance to improve ties between the two emerging Asian powers and upgrade their trade structure.
Even though the Indian government is attempting to develop advanced industries to make its emerging economy a manufacturing power, the country still relies on the agricultural sector and low-end workshops to employ many poorly educated workers.
India is a developing country with a large, agriculture-dependent population. In the light of the general elections drawing closer next year, raising farmers’ incomes is very important for the Narendra Modi administration.
Amid escalating Sino-US trade friction, US farm products have borne the brunt of retaliatory tariffs imposed by China. India can focus on numerous farm products to expand its exports to the Chinese market, following the hike in duties on US agricultural goods.
A study by the commerce department in India has analyzed and identified at least 100 products where India can replace US exports to China, India’s Economic Times reported recently, adding the country can, in particular, grab “a bigger share of the Chinese market for cotton, corn, almonds, wheat and sorghum.”
India’s efforts to expand its farm exports to China are welcome. Closer cooperation in the sector will increase trade and reduce India’s trade deficit with China.
India is likely to be a major beneficiary of the trade conflict between the world’s two largest economies. The Indian government is wooing global manufacturers to set up shop in India.
With the additional tariffs imposed by China and the US on imports from one another, India has become a more attractive destination for global manufacturers because madein-India products now can help manufacturers evade the new US and Chinese duties.
India may become a springboard for Chinese high-end companies to enter the US market. Some people have expressed concern that the rise of “Make in India” might bring China and India into intensified competition in some industries, but now the story may have a different ending. The Sino-US trade conflict may help China and India find more common ground in their own national interests to counter the pressure of trade protectionism.
India will not be the only beneficiary of the Sino-US trade conflict. Countries such as Vietnam have increased exports to China in recent years, largely thanks to the establishment of the China-ASEAN free trade area (CAFTA).
The rules of zero tariffs and reduction of non-tariff barriers brought about by the CAFTA give Vietnamese companies a competitive advantage over Indian ones.
Signing the Regional Comprehensive Economic Partnership to set up a free trade zone between China and India will help the South Asian country cover its shortcomings.