Trade battle to help India

The outcome of the US-China trade talks will impact Indian policies

By R. Suryamurthy in New Delhi
  • Published 9.05.19, 12:47 AM
  • Updated 9.05.19, 12:47 AM
  • a min read
  •  
Washington on Wednesday said it would hike tariffs to 25 per cent from 10 per cent for Chinese goods worth over $200 billion from Friday Picture by Shutterstock

 The outcome of the US-China trade talks will impact Indian policies not only by increasing the options for exporters but also preparing the ground for the shift of manufacturing units from China to India.

The talks are significant as India can formulate specific policies to boost shipments and attract units that plan to shift base out of China, a senior commerce ministry official said.

Washington on Wednesday said it would hike tariffs to 25 per cent from 10 per cent for Chinese goods worth over $200 billion ,from Friday.

US President Donald Trump has slammed China for indulging in what he said are unfair trade practices, particularly with regard to access to its giant market, intellectual property and technology transfers.

“The United States has been losing, for many years, $600-$800 billion a year on trade. With China, we lose $500 billion. Sorry, we’re not going to be doing that anymore!,” Trump tweeted.

Indian officials said the government would discuss sector-specific action plans with industry and exporters.

Analysts said India needed to change the composition of its exports to China if it wanted to turn the trade war to its advantage. Exporters need to shift to value-added and finished products from raw materials and intermediates.

The Indian commerce ministry has identified about 400 items for exports to China. New Delhi sees scope in agricultural products, animal feeds and oil seeds.

Senior officials of India and China will meet here on Thursday to discuss trade-related issues, an official said.

The government is also keen to attract investments, which plan to shift base from China because of rising costs, tougher trade and environmental norms.

Officials said the government plans to come out with a new industrial policy.

“The policy is almost ready….there could be some tweaking before being placed before the Cabinet after the new government comes in. It can attract those who are looking to move out of China to come to India and set up base.”

A survey by UBS Securities said the trade was a catalyst to move units out of China. The survey said Indian could benefit as there has been increased FDI interest and enquiry to collaborate in manufacturing with Indian partners.