U.S.-China Trade "Reset" Hinders India's Manufacturing Dreams

(MENAFN) Recent developments in trade relations between Washington and Beijing could potentially hinder India's aspirations to become a global manufacturing powerhouse, just as the nation was beginning to demonstrate progress in this direction.

Last week witnessed a significant shift as tariffs imposed by the U.S. President Trump on Chinese goods saw a substantial reduction, plummeting from 145% to 30%, compared to India's 27%. This adjustment followed negotiations between the two economic giants in Switzerland.

According to Ajay Srivastava of the Delhi-based Global Trade Research Institute (GTRI), this trade "reset" raises concerns that manufacturing investments previously shifting from China to India might now "stall" or even "head back". He further cautioned, "India's low-cost assembly lines may survive, but value-added growth is in danger."

This shift in outlook contrasts sharply with the optimism prevalent in Delhi just last month. This earlier confidence stemmed from Apple's indication of a significant move to transfer the majority of its iPhone production destined for the U.S. market from China to India.

While this relocation by Apple might still materialize, it occurred against the backdrop of U.S. President Donald Trump's disclosure that he had advised Apple CEO Tim Cook against establishing production in India, labeling it "one of the highest tariff nations in the world".

Prior to the announcement of the U.S.-China trade agreement, Shilan Shah, an economist at Capital Economics, noted in an investor briefing that "India is well positioned to be an alternative to China as a supplier of goods to the U.S. in the immediate term," Shah highlighted the fact that "similar to those exported by China", 40% of India's exports to the U.S. fell into the same categories.

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