Thursday, October 11, 2018

US - China trade war gives India a opportunity to curtail its trade deficit going forward

NEW DELHI: The ongoing trade war between the US and China that has witnessed Beijing slapping higher duties on American goods in tit-for-tat action has opened up a window of opportunity for India that has long struggled to contain a widening trade deficit with its giant neighbour. But gains are contingent on getting market access and achieving competitiveness in many cases.

Trade war

According to a Commerce Ministry study, of the 603 American tariff lines (items) on which Beijing has imposed extra duties in the range of 15-25%, India can ship out more in case of 44 items without much difficulty, as it currently has access to the Chinese market in these products. However, in case of 17 items where American supplies are substantial, India doesn’t have market access; so, it can export these items only if China opens up further.

The study, however, doesn’t provide a list of items where the potential for further exports to China exists (apart from just grapes and alloy steel seamless boiler).  Also, as pointed out by independent analysts, most of the US supplies to China are expected to continue despite higher duties.

India doesn’t export as many as 54 items where American supplies to China are substantial. Most of the other items are small-ticket ones where imports by China from the US are negligible and or up to $10 million each.

Some analysts have, however, suggested that India explore the possibility of more exports in farm items like cotton, oilseeds, including soybean, oilmeals, maize, copper and chemicals, even if in some items, the Chinese demand may be much higher than what India can supply. China has either imposed or proposed tariffs on $110 billion of US goods, representing most of its American imports ranging from farm items like cotton to automobiles.