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The ongoing trade war between the United States and China has presented a unique set of opportunities for other nations, particularly India, to capitalize on the shifting global economic landscape. As the two economic superpowers engage in a tit-for-tat exchange of tariffs, Indian businesses are actively exploring avenues to increase their export market share and fill the voids left by disruptions in the US-China trade relationship. The Indian commerce and industry ministry has initiated efforts to identify specific sectors and products where Indian exporters can gain a competitive edge. A crucial aspect of this strategy involves analyzing the tariff lines affected by the trade war and determining how Indian companies can competitively supply those goods. The 90-day reprieve offered to Indian exporters, which temporarily suspends the additional 10% tariffs, provides a window for businesses and their overseas buyers to adjust and share the burden of these tariffs with consumers. However, it is crucial to recognize that this is a temporary measure, and long-term strategies are necessary to ensure sustained growth in exports. The US decision to lower reciprocal tariffs to 10% for all countries except China has placed Indian exporters on a level playing field with competitors such as Bangladesh and Vietnam. While this presents opportunities, it also underscores the need for Indian businesses to enhance their competitiveness and efficiency to effectively capture market share. Sectors like textiles, clothing, and footwear are expected to witness increased market share in the US, but exporters are wary of increased competition from other countries. Moreover, the European market is anticipated to be flooded with Chinese goods as China seeks alternative markets to offset the impact of US tariffs. This underscores the importance of Indian businesses diversifying their export destinations and strengthening their presence in non-American markets. The US imports approximately $120 billion in textiles and apparel annually, with China supplying around 25% or $30 billion. This substantial market share is now potentially open to other players, providing a significant opportunity for Indian exporters to increase their sales in the US. However, the increased competition from China in other markets necessitates that Indian businesses adopt proactive measures to protect their existing market share. The US remains the largest destination for Indian textiles and apparel exports, highlighting the importance of maintaining and expanding market access in the US. Concerns have been raised about potential under-invoicing of goods by Chinese exporters, which could undermine the competitiveness of Indian products. Therefore, vigilance and strict enforcement measures are essential to ensure fair trade practices. The extant market that China was servicing will be distributed among competing countries. We are at equal footing with all our competitors except China which has a disadvantage for some time but one has to be watchful as capacities don't grow in uncertain times. Exporters have indicated that buyers have started exploring ways to pass on the higher tariff burden to consumers, including splitting bills for packaging material and other invoices. This strategy could help mitigate the impact of tariffs on export competitiveness. The government and industry stakeholders have also been urged to explore opportunities in food supply chains, particularly for products like tea, honey, and processed food, where India could gain an edge. Further the Confederation of Indian Textile Industry has urged the government to consider introducing an interim Textile Exports Protection Scheme to mitigate the burden of additional tariff costs faced by exporters, terming the 90-day pause on reciprocal tariffs announced by the Trump administration as a stopgap measure.
To fully capitalize on the opportunities presented by the US-China trade war, India needs to focus on several key areas. Firstly, enhancing the competitiveness of Indian industries is crucial. This involves improving infrastructure, streamlining regulations, and promoting innovation. Secondly, diversifying export markets is essential to reduce reliance on any single market and mitigate the impact of potential trade disruptions. Thirdly, strengthening trade negotiations with other countries and regions is crucial to secure favorable market access terms for Indian exporters. Fourthly, promoting value-added exports is essential to increase the profitability of Indian exports and move up the value chain. This requires investing in research and development, promoting technology adoption, and developing skilled manpower. Finally, creating a favorable policy environment for exports is crucial, including providing access to finance, reducing transaction costs, and simplifying export procedures. India's long-term success in export markets will depend on its ability to address these challenges and create a vibrant and competitive export sector. One potential area to watch is whether the US and India will successfully complete the BTA (Bilateral Trade Agreement). This could be advantageous to both parties. The US could reduce dependency on China and India could export more products to the United States. The article makes the claim that the first tranche of the BTA should be completed by September-October. Therefore, we should expect to see some activity in this area in the coming months. However, it is unknown whether this timetable will be met, or if the BTA will be successfully completed. Furthermore, it should be considered that tariffs can be lifted or re-introduced at any time. As such, exporters must always be watchful and nimble.
The Indian government's role in supporting exports is crucial in the current environment. This includes providing financial assistance, promoting export marketing, and facilitating trade. The government should also work closely with industry stakeholders to identify and address specific challenges faced by exporters. In addition, the government should promote export diversification by providing incentives for exporters to explore new markets and develop new products. Furthermore, the government should invest in infrastructure development, particularly in ports, roads, and railways, to improve the efficiency of export logistics. The government should also streamline export procedures and reduce transaction costs to make it easier for businesses to export. A coordinated effort between the government and industry is essential to maximize the benefits of the US-China trade war and strengthen India's position as a global exporter. The article also makes a claim that the US on Wednesday announced that the higher 10% tariff, which was effective from April 5, will continue. In the case of India, the additional duty of 16% has been put on hold for 90 days. The White House issued executive orders on the same Thursday. This information is important to be aware of because it highlights that things are not fixed or certain. Exporters must be aware that tariffs can be brought back at any time. As such, exporters must remain agile and adaptable to the dynamic economic landscape. While the trade war presents opportunities, it is also important to be aware of the potential risks, such as increased competition and protectionism. To mitigate these risks, India needs to strengthen its domestic economy, promote innovation, and invest in human capital. The Indian economy has recently experienced significant growth, and it is important to sustain this momentum to create a strong foundation for export growth. The overall outlook for Indian exports is positive, but it is important to remain vigilant and address the challenges and risks that lie ahead. With a proactive and strategic approach, India can capitalize on the opportunities presented by the US-China trade war and become a major player in global trade.
Source: India eyes export gains as US-China trade war opens market opportunities