The U.S. – China trade war is opening new opportunity trails for India. Amid the stiff tariff war between the two economic giants, India is quickly emerging as their immediate choice to bridge their own import gaps.  India, the ‘next big thing’ in the world economy, needs to gear up fast to catch up with these new trade opportunities.

In the wake of hardening of crude oil prices, India was battling with the unprecedented fall of rupee. The pressure has now eased. The crude oil prices have crashed by more than 20% from its highs. It has helped rupee to regain its lost ground to some extent along with the current account deficit. However,  India still needs to reduce trade deficit and subsequent current account deficit as it has always been a matter of concern to the policy makers. As both U.S. and China turning to competitive markets, India can become their obvious choice.

Opportunities in China

China’s commodity market has been vacated by the US exporters due to increased tariff by the former. As per a commerce department study analysis seen by E.T. , India can replace US exporters with almost 100 products, materials /commodities market participants too. Beijing has imposed higher import duties on these products which originate in US.

At this point, India can grab a big chunk of China’s cotton, corn, almond, wheat and sorghum market where currently they do not have any market access. The list comprises of 17 goods. As per the government report, US exports fresh grapes, cotton linters, flue-cured tobacco, lubricants and certain chemicals, including benzene that value above $10 million.

China is about to lift almost 6 year old ban on oil meal import from India. As per the latest news reports, Chinese companies have approved half dozen Indian companies to import rapeseed meal.

At present, China’s imposed tariff is 15%-25% on US exports where India can export them at 5%-10% duty for being in the list of MFN (Most Favored Nation). India will also gain additional tariff discount of 6%-35% as MFN under Asia Pacific Trade Agreement.

Opportunities in the U.S

The U.S. – China trade war will no doubt can create opportunities for job-led manufacturing sector of India. Last month, the U.S administration expressed their interest in strengthening ties with Indo-Pacific region that spans from India to Samoa.

India can be an obvious alternative for U.S to import capital goods like machinery, mechanical and electrical equipment, vehicles, aircraft machinery minerals, chemicals, and allied products. India also has ample opportunity to enhance their export of agricultural items, rubber goods, soy meal supplies, leather and base metal to U.S.

According to Ravi Sehgal, chairman of Engineering Export Promotion Council (India), they are eyeing to increase engineering exports to both U.S. and China. In order to make it happen, some policy straightening, change of tax refund procedural issues and custom clearances needs to take place. The commerce ministry of India has come forward to lend their full support.

In order to pave the way for this change, administration of both the countries has to create a favorable policy environment and coordinate with each other to synchronize bilateral agendas.

Conclusion

India aspires to become the next big manufacturing hub of Asia. Right now, what India needs is funding in terms of additional investment and modern technology. Apart from that India boasts of an enormous workforce. India needs to make some policy adjustments, proactive approach in offering competitive packages and tax incentives to attract potential investors towards its soil. It will not only repair India’s current account deficit scar but also create plenty of job opportunities across small and medium enterprises engaged in export sector. 


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