NEW DELHI: With Donald Trump threatening to impose additional duties against China and Mexico, the government has launched a multi-pronged exercise to identify areas where India can seize an opportunity while also monitoring currency movement.
While the recent rupee depreciation is seen as helpful in making Indian goods more competitive, much will also depend on how other currencies move. Official sources told TOI that all eyes are on China, as a steep depreciation of the yuan could help the Asian giant counter some of the impact of the additional tariffs that the Trump administration imposes.
Since October-end, rupee has weakened around 0.7% against US dollar, while the Chinese currency has seen a near 2% depreciation. Several other currencies have weakened even more. The jury is, however, divided on the extent of China’s benefit from depreciation.
While government officials monitor Trump’s next moves, they are breathing easy as India has not yet been included in the US president-elect’s trade war calculations. However, they are not ruling out the possibility of future steps, which many believe will be a negotiating strategy by the new US administration to get India to offer some concessions to American goods.
For the moment, the commerce department is assessing sectors, where India can gain from actions being taken against China and Chinese companies. Textiles, electronics goods and pharma are among sectors, where govt is assessing the capacity that manufacturers in India have and if they can ramp it up to tap into any opportunity in future. Sectors, such as textiles and garments, are especially lucrative as the recent tension in Bangladesh could also help Indian players.
“We have seen an increase in mobile production in India, catering to export demand. Similarly, there is a need to push the production of laptops and personal computers in In dia, which can also meet demand in other countries, especially as China faces pressure,” a senior official told TOI. India will, however, have to compete with countries such as Vietnam to grab a bigger share of the American pie.
In last fiscal year, the US was India’s largest trading partner with bilateral trade of almost $120 billion. With exports of $77.5 billion, India had a trade surplus of over $35 billion, according to commerce department data. According to US data, India had the seventh highest trade surplus, with Trump’s recent threat focused on the top three countries with a favourable balance of trade – China, Mexico and Canada.
Government officials have said the numbers of goods trade need to be examined along with services, where the US enjoys significant advantages.
