US-China trade war can make Indian products competitive

NEW DELHI: With the US imposing additional 25 per cent duty on imports worth $34 billion from China, certain Indian products may become more competitive, Confederation of Indian Industry (CII) said on Sunday.

An analysis by the industry chamber revealed that India should focus on the US market for items in the categories of machinery, electrical equipment, vehicles and transport parts, chemicals, plastics and rubber products.

"India can focus on numerous goods for expanding its exports to the US and China markets following the hike in duties by both countries on imports from each other," CII said.

Top exports from India to the US which are covered in the list of items for which tariffs have been hiked include pumps, parts of military aircraft, parts for electrodiagnostic apparatus, passenger vehicles of 1500-3000 cc, valve bodies and parts of taps, said the chamber.

Exports of these items stood at over $50 million in 2017, according to CII, and can be increased with concerted efforts.

Countries such as Vietnam, Indonesia, Thailand and Malaysia have increased their exports of these products to the US in recent years, the chamber noted.

Based on India's current exports to the US in these categories, products such as intermediate parts for the defence and aerospace sector, vehicles and auto parts, engineering goods, etc. have a higher potential for export, it said.

"Sectors like apparel and textiles, footwear, toys and games and cell phone manufacturing are becoming competitive industries in India and need to be encouraged," CII said.

The chamber suggested that the trade dialogue with the US should be strategised taking into account India's competitive advantage in these products.

Moreover, foreign direct investments from the US should be encouraged by boosting confidence of US firms in India's business climate, said CII, adding that this might necessitate addressing their concerns regarding non-tariff barriers in India for better long term outcomes.

In the domestic industry, it stated that it is important for India to enhance productivity while adding technology to its domestic production in the identified products.

CII examined 818 product lines where the US has raised tariffs for imports from China. Between 2012 and 2017, China's exports to the US have moved up the value chain with accelerated growth in high-technology items such as telecommunications equipment, automotive, cell phones, etc.