Will India gain from US-China trade tensions?
As the latest US tariff hike has escalated trade tensions with China, there seems to be a potential opportunity for India to benefit from this situation.
Though reality is expected to unfold in the direction quite slowly. Amid an anticipated shift in trade and investment away from China due to the latest US-China trade friction, India is in a position to offer better growth to foreign investors as it begins laying the groundwork to revamp the 2016 model Bilateral Investment Treaty.
Thus India “replacing China” in global economic and trade cooperation has become a subject of enthusiasm for not only most Western media outlets but also for most of the World media.
Investment climate in India based on surge in infrastructure, political stability, young educated large working population, a large industrial and scientific base and other such geopolitical considerations, sound economic laws and market realities.
In the current global economic and supply chain cooperation landscape, India has slowly but surely developed a solid position over several decades, supported by its manufacturing and technological strengths.
In contrast, most other countries faces numerous challenges to fill the gap. The Covid 19 and Trump’s disruption to normal US- China trade and industrial cooperation in a short period of time has unhinged China to quite an extent
From the perspective of investment and trade shifts, the trade friction triggered by the US, trade between China and the US has been significantly affected.
Though China still remains an important trade partner and production base for not only American companies but even Indian Companies.
The fact is that quite a few American companies have chosen to leave China – due to the disruption caused by the US tariff hike – and India has attracted these American companies to relocate their production lines.
India’s manufacturing sector has grown rapidly in recent years, it has developed the capability to become a major cog in the global supply chain. In coming years, the possibility of India taking over Chinese manufacturing is quite real.
Compared with China, India’s manufacturing output is still behind, but its infrastructure, such as roads, railways and ports, are getting upgraded at a very fast rate. These factors have really improved India’s ability to attract foreign direct investment and ensure better competitiveness.
India and the US have moved closer strategically in terms of geopolitics, though there are will remain differences on trade issues.
With trade likely to emerge as the best area of cooperation between India and the US, New Delhi has lowered certain import duties to signal that it is moving to allay concerns of the US, according to a US media report.
India is thus leveraging the opportunities presented by US-China trade friction to enhance its economic position. However India will maintain best trade relations even with China, as farms possible.
China and India are not simply in a relationship of replacing and competition in global economic and trade cooperation and supply chains; rather, there are significant aspects of mutually beneficial cooperation.
In case both countries observe and address their economic and trade cooperation from a geopolitical perspective, it is likely to lead to a prosperous Asia.
India is aware that US government’s imposition of tariffs and tightening of policies on imports constitute not only a challenge faced by China, but also a challenge for the entire Asian industrial chain, with India being a part of it.
Therefore India has been strengthening cooperation with the Asia-Pacific industrial chain, with ASEAN at its core. This is advantageous for the development of India’s manufacturing sector and economy.
It has taken similar action with UAE, Saudi Arabia, other Gulf Countries and even Central Asian Countries.
