India plans to fill gap left by US exports to China

Date: Tuesday, August 28, 2018
Source: AJOT

India has drawn a list of goods it can export to China, replacing U.S. exports that have become costlier in light of the trade spat between the world’s two biggest economies, according to a person with knowledge of the matter.

The South Asian nation has identified more than 40 products, including fresh grapes, cotton linters, flue-cured tobacco and alloy steel seamless boiler, where it’s in a position of advantage to replace or capture U.S. trade market share with China, the person said asking not to be identified as discussions are internal. Boosting exports will help India reduce a $63 billion trade deficit it runs with China, which is also New Delhi’s largest commercial partner.

A study found that India is strong in its capability to export about 20 products such as frozen bovine meat and almonds, but it faces market-access issues in China. Two calls made to India commerce ministry spokesperson’s mobile phone weren’t immediately answered.

China recently started purchasing soybean from Brazil after slapping a 25 percent tariff on the oilseed’s shipments from the U.S. as the trade tensions between the two nations intensified. Meetings between Chinese and U.S. officials last week made little headway, setting the stage for the U.S. to push ahead with the next round of tariffs on up to $200 billion worth of Chinese goods.

The Indian study shows at least 80 more items have potential for exports to China. The government has instructed its departments and industry bodies to work out strategies to ramp up production in sectors where India has a clear advantage.

The commerce ministry has asked the embassy in China to be an enabler, while offering business-to-business meetings for Indian exporters interested in that market, the person said.

“One of the major impact of the trade war would be that there will be a lot of re-organisation and reconfiguration of supply chains,” Amitendu Palit, a senior research fellow at the Institute of South Asian Studies, National University of Singapore, said by phone. “There is a possibility that India may become part of some production chains,” he said.

It is still too early, however, to say that India will have immediate gains due to the trade war, Palit said.

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