India may manage to benefit from the on-going tariff war between China and the US by increasing its exports to Beijing, but the rise is likely to be limited to just a handful of items, a Commerce Ministry study has estimated.
Nonetheless, the increased need for both the US and China to have India as a reliable partner in keeping global trade and investment flows open provides India with a new leverage in negotiating the terms of economic engagement with both economies which policy makers should make effective use of, the study titled ‘Sino-India Trade-A Perspective’, advised.
“The study was commissioned by the government to try and understand the reason behind the widening trade deficit with China, which crossed $60 billion, and find ways to bridge the gap. Exploring the opportunities for India flowing from the US-China trade stand-off is an important part of the study,” an official told BusinessLine.
Of the over 600 items on which the Chinese government has imposed higher tariffs for the US, India at present exports just 44 items and there is scope for increasing sales in China of items such as fresh grapes and steel alloy, the study said.
For future engagements, the study proposed easing of non-tariff barriers in items like pharmaceuticals, fruits and meat and harnessing potential in services like IT.
“The specific lines in which India can potentially expand exports to China immediately based on its strengths and available market access in China and also those in which concerted efforts need to be made to acquire market access have been shared with the line Ministries/Departments,” the study said.
Although imposition of higher tariffs by China on about 603 items imported from the US in about four tranches presented a possibility to India to increase exports of all these items to Beijing, the actual picture is not quite rosy.
Of all the items on which China has imposed higher duties, America’s exports of about 262 items to the country is negligible while for 149 items US exports to China are less than $10 million for each item. “Increased tariffs in these lines would therefore not result in substantial opportunities for other country exporters,” the report pointed out.
Then there are 17 items, in the list of 603, where US’ exports to China are more than $10 million but India still cannot export to China despite exporting it to other parts of the world due to market-access barriers.
“While trying to find out ways to increase exports of the 44 items where it has an advantage, India could definitely focus on the 17 other items where it has a potential to export but is currently denied market access by China,” the official said.