Our Bureau
New Delhi
In a move aimed at easing trade tensions, the United States and China have agreed to a 90-day reciprocal tariff truce, reducing tariffs on each other’s goods and sparking a wave of cautious optimism-and concern-among Indian exporters. While the truce is widely seen as a step towards global trade stability, industry leaders warn that it could narrow India’s recent export advantages.
Under the agreement, the US will lower tariffs on Chinese imports to 30% from a previous 145%, while China will reduce tariffs on US goods to 10% from 125%. This significant reduction, experts say, brings the two economic giants closer to parity in tariff structures, potentially reshaping the competitive landscape for global exporters.
Indian exporters, who had benefited from the earlier US-China trade war by capturing market share in sectors like engineering goods, textiles, and chemicals, are now closely monitoring the situation. Pankaj Chadha, chairman of the Engineering Export Promotion Council, cautioned that China’s scale and efficiency could quickly erode India’s competitive edge, especially with tariff differentials shrinking. “A 20% delta will be easily beaten by the Chinese,” Chadha noted, highlighting the lack of sectoral tariff adjustments in critical areas such as steel, auto components, and aluminium.
SC Ralhan, president of the Federation of Indian Export Organisations, described the truce as a “double-edged sword.” While the risk of intensified competition in third-country markets is real, Ralhan believes India can still consolidate gains in sectors less affected by the truce, including pharmaceuticals, jewellery, engineering goods, and IT-enabled services.
To maintain its export momentum, industry leaders are urging the Indian government to pursue preferential trade agreements with the US and other major markets. They argue that such deals are essential to offset the renewed competition from China and to safeguard India’s recent export gains.
As the 90-day truce unfolds, Indian exporters remain vigilant, balancing hope for new opportunities against the threat of increased rivalry from their Chinese counterparts. The coming months will be critical in determining whether India can adapt and thrive in the evolving global trade environment.
