US-China Trade Pact Unlikely To Dent India's Exports 

Though several analysts told The Secretariat that the move may not be positive for Indian exporters, as it is expected to increase competition for them by narrowing the tariff gaps between New Delhi and Beijing, the overall feeling is that an easing of supply chain dynamics will bring stability to the global economy.

That apart, a 30 per cent tariff on Chinese imports into the US is still higher than the tariff rate on India, offering New Delhi the benefit of arbitrage.

“India’s exports cannot be based on the trade dealings between two other countries. That is not our focus. We will look at our issues — opportunities, and challenges independently, with a clear aim to boost our exports,” the official said.

“A global economic turmoil or a recession-like situation in the US will not help anyone,” the official added. The US’s economy shrank 0.3 per cent in the first quarter of this year, which has increased pressure on the Trump administration.

However, this could entail stark competition for Indian exporters considering the narrowing of the tariff gaps between China and India exports, Krishan Arora, partner and leader, India Investment Advisory Services at Grant Thornton Bharat LLP said. "It would be important for India to seek strategic negotiations in light of these developments and also showcase India Inc's sectoral strengths and capabilities in 'Make in India' products and Service sectoral capabilities on one side as also identify the need to revisit their overall production and logistics costs and create more efficient value chains,” Arora said.

India is also looking to conclude its bilateral trade agreement (BTA) with the US at the earliest. However, a senior government official, on condition of anonymity, told The Secretariat that the trade dynamics between the US and China are not India’s focus.

“India needs to boost its manufacturing through the Make In India scheme, while diversifying export markets,” Ashwani Mahajan, national co-convener of Swadeshi Jagaran Manch (SJM) told The Secretariat.

“With the China Plus strategy for most countries now gaining momentum, we should also profit from it,” Mahajan said, adding that the impact of the trade war on the US economy was “much deeper” than expected.

Uneasy Truce?

While the news provided much-needed relief to both Washington and Beijing, the average tariff rate in the US has gone up from what it was before Trump took charge. 

Sources also said that despite reaching an agreement, tensions between the two countries may not be over. According to The Conversation, the US's average trade-weighted tariff rate was 2.2 per cent on January 1, which is now estimated to be 17.8 per cent — the highest tariff wall since the 1930s.

Canada, Mexico, and China remain the largest trading partners of the US. Now, India and the US have set a bilateral trade target of US$ 500 billion by 2030.

Earlier this month, India and the UK inked a Free Trade Agreement (FTA). New Delhi is now looking to conclude other ongoing trade negotiations with the EU, Peru and Oman, amid heightened global risks and uncertainties.