India has increased its watch to stop the inflow of cheap Chinese goods into the country. This move comes after the US imposed steep tariffs on Chinese exports, raising concerns that China may try to divert its surplus products to other markets like India.
Commerce Secretary Sunil Barthwal has reportedly held several meetings to review the current situation. Meanwhile, government officials are actively engaging with industry leaders to understand the on-ground impact and plan effective steps to safeguard the Indian economy.
The Commerce Ministry has already been closely monitoring imports like Chinese steel, which affected local industries after the previous US tariff hike. Now, officials have confirmed that the watch has been extended to cover a wider range of goods.
While the US has hiked tariffs for all countries, China is the worst hit as the additional tariff of 34 per cent announced by President Donald Trump has ramped up the total duty to 54 per cent. China has retaliated against the US tariff hike by increasing duties on all American goods by 34 per cent and placing export curbs on essential rare earth metals required for the vital electronics and defence industries.
China has also imposed restrictions on several US companies, especially those in defence-related industries, in a tit-for-tat move. India’s exports to the US constitute only 4 per cent of its GDP, so the direct impact of the 27 per cent hike in tariffs on Indian goods announced by President Trump will have only a “limited” impact, according to an SBI Research report..
The tariffs levied on India are the lowest among its Asian peers, compared to 34 per cent on China, 36 per cent on Thailand, 32 per cent on Indonesia, and 46 per cent on Vietnam. This is expected to give India a comparative advantage over these countries and result in an increase in exports in some sectors over the long term, the report states.
The higher tariff on textile export-oriented countries like Bangladesh, China, and Vietnam may lead to lower demand due to inflationary pressures. However, in the long term, India stands to benefit as it endeavours to corner a larger share of the market. India’s export to the USA on textile products is around $7 billion during April-December, FY25. So, this sector may be impacted negatively in the short run but may have a positive impact in the long run, according to the report.
In electronics, China has a tariff of 54 per cent to 79 per cent, so India has a better position compared to the key electronics exporting countries. India’s exports of electronics to the US were worth around $9 billion during April-December of FY25, which holds the highest share of 15 per cent in total exports.
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