NEW DELHI: The US-China trade war presents both challenges and opportunities for India, a report by the government think tank Niti Aayog said on Wednesday. The report called for enhancing domestic manufacturing capabilities, particularly in high-tech industries. However, it said India had seen limited success so far in capturing China plus one strategy as countries such as Vietnam, Thailand, Cambodia, and Malaysia have emerged as bigger beneficiaries of the shift.
The US has imposed tighter export controls and tariffs on Chinese goods to limit China’s growth and spending on technological progress, which has led tothe fragmentation of global supply chains. The report said this has also prompted multinational companies to look for alternatives to Chinese manufacturing while detailing the US-China tensions and technology trade wars.
“Whatever Trump has announced so far, which is likely to come up, basically targeted three countries: two are our neighbours, and one is a faraway country. There are opportunities; if we are men at first slip, the ball is coming in our direction. We will hold it or drop the catch, and I think it is for us to see. The numbers that are there are immense. There’s going to be huge disruption because of that. Still, there’s going to be huge opportunities,” B V R Subrahmanyam, CEO at Niti Aayo,g told reporters during the launch of the inaugural edition of the think tank’s Trade Watch quarterly report, which is expected to be a key input for evidence-based policymaking.
The report said the domestic iron and steel industry, representing 23.5% of its EU exports, faces the highest exposure under the proposed carbon tax or CBAM (carbon border adjustment agreement).
The report said that Indian steel companies may incur 20-35% tariffs, leading to higher costs, reduced competitiveness, and lower demand in the EU market. Compliance costs will rise due to the need for detailed emissions reporting, according to the report, which offers a snapshot of the country’s trade position, combining global demand-supply perspectives, sectoral performance, and insights into emerging trade opportunities.
“With geopolitical shifts and a growing emphasis on sustainability, India must implement policy measures to ensure coherence between trade and environmental goals, aligning its long-term trade objectives with global trends,” said the report.
