Trade Wars are coming. Which side will India be?

The Trade war between US and China is almost certain to hit the rest of the world. All most all supply chains have Chinese factories in between and US markets in the end. The disruption of this long chain is going to hits almost all countries.

Today Indian stock exchanges have nose-dived by over a percentage point. The immediate reason is US’ decision to impose 25% duties on Chinese imports, including capital goods. Beijing has threatened retaliation. In all certainty, loss of market in world’s largest economy will lead Chinese with over capacity. This in turn will lead to dumping of Chinese products in the markets like India.

The Chinese dumping will also affect other markets, making Chinese imports much cheaper, hitting Indian exports or it will lead to trade barriers across the globe hitting the exporters in medium to long term.
The response from Indian government has been a naught to say the best with Commerce Minister suggesting that “India needs to explore ways to boost exports”. He said the government was working on a strategy for market penetration, market research, new products and new markets to boost exports. Trade events are being organised in African, Central and Latin American countries to find new markets and to introduce new products.

However given the gravity of situation, this looks like a more long term effort, which should have had been introduced by Modi cabinet in 2015 itself. Unless government immediately ups its ante for protecting the local productions, Make in India will quickly give way to Import-n-sell in India and that’s not the end of it. Hopefully in the upcoming Trade war, India will choose its own side.

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