Indian export leaders are optimistic that the ongoing US-China trade tensions could open significant opportunities for India in trade and foreign investment. According to key industry figures, India stands to benefit as China faces heavy tariffs and US companies look to relocate their operations. Ajai Sahai, Director General and CEO of the Federation of Indian Export Organisations (FIEO), said that with Chinese imports facing a 125 percent duty in most sectors, “China will have no other option but to vacate the US market.” This shift could create opportunities for India, especially in sectors where China holds a dominant market share, such as textiles and footwear.
India as a Relocation Destination
Sahai explained, “US companies or other companies who were placed in manufacturing in China to cater to the US market will be relocating. And they may also be relocating to India, because India has the advantage of having a huge market in itself.” He emphasized that India is developing an ecosystem to integrate into global value chains, making it an attractive alternative manufacturing base for businesses seeking to move operations from China.
US-China Trade Agreement Impact
The recent 90-day window announced by the US for negotiating bilateral trade agreements has been hailed as “a huge relief to the export sector,” Sahai noted. Before the announcement, many orders had been placed on hold, and companies focused on the US market faced the risk of production halts. However, the 90-day timeframe provides stability, and Sahai reassured, “Since we have the 90 days time frame, it will be business as usual. Exporters will continue to export to the US.” India, as the first country to enter such an arrangement with the US, holds the “early mover advantage.”
Challenges and Opportunities in Engineering Exports
Pankaj Chaddha, Chairman of the Engineering Export Promotion Council (EEPC), acknowledged that the US is the top destination for Indian engineering goods, with India exporting around USD 20 billion worth of goods in 2024-2025. However, he cautioned that “engineering goods exports may drop by USD 4 billion to USD 5 billion annually in the first year.” Chaddha recommended that India focus on accelerating trade agreements with the EU, UK, Canada, and the GCC to offset potential losses.
Growth in Smartphone Exports
The smartphone sector has been a notable success for India, with Sahai highlighting the impact of the Production Linked Incentive (PLI) scheme in boosting iPhone exports. While the sector shows promise, Sahai pointed out that “the value addition is not up to the desired level,” and domestic component manufacturing needs improvement. The government is addressing these issues through newly introduced schemes for the electronics sector.
Concerns Over Chinese Dumping
Export leaders also expressed concerns about potential Chinese dumping of goods in the Indian market as they lose US market share. Sahai assured that “the government has various instruments at their disposal, maybe anti-subsidy, maybe anti-dumping, maybe safeguard duty, maybe the minimum import prices” to address such challenges.
Despite these concerns, the export leaders remain confident that India is well-positioned to take advantage of the changing global trade dynamics.
(With Inputs From ANI)
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