Our Bureau
New Delhi
The US-China trade war is working in India’s favour as Chinese firms are reaching out to Indian exporters to complete their orders to retain their American customers and avoid incurring heavy losses.
The trade war has turned into a boon for India as several Indian companies were approached by Chinese companies at Canton Fair that runs through May 5 in Guangzhou. The trade information was shared by Ajay Sahai, director general of Federation of Indian Export Organizations in an interview to Bloomberg. In return for the sales, the Indian firms would pay a commission to the Chinese businesses that would be negotiated between the buyers and suppliers.
The Chinese companies are currently facing trade tariffs as high as 145 percent from the Trump administration leading the country to find survival mechanism to navigate through the economic uncertainties. Presently, there is a 10 percent tax levied on goods that are shipped to the US from India, which may increase to 26 percent in the coming July.
It is noteworthy to mention that Chinese companies had adopted similar coping strategies in the first term of Donald Trump as US President. Back then, Trump had also hit China with a tough tariff regime forcing the country to turn to other Southeast Asian economies for relief. Following the same, China had set up factories in Vietnam and also started shipping goods to places like Thailand, where they were then exported to the US. This time around, with Trump hitting countries like Vietnam with 46 percent reciprocal tariffs, Indian exporters may see more orders diverted their way.
Since the Indian government restricts Chinese investment in the country, the Chinese companies used a different strategy to get their supply needs met by Indian firms. According to Sahai, Indian firms at the Canton Fair were approached to supply goods to US companies under the brands of the Chinese firms, or co-branded with the Indian firms.
India is already in the process of finalising a trade deal with US, which will possibly help the country with a favourable tariff regime in the future. During his visit to India recently, US President JD Vance had called for a new era of collaboration between the two nations where he highlighted the progress made on a bilateral trade deal that they aim to finalize by fall of this year.
