Trump’s tariff plan on China may boost India’s exports: NITI CEO

US President-elect Donald Trump’s announcement to impose high tariffs on imports from China and other countries would be beneficial for Indian exporters and they must prepare themselves to tap the opportunity, NITI Aayog CEO BVR Subrahmanyam said Wednesday.

“Whatever Trump has announced so far, which is likely to come up, there are opportunities. We are a man at first slip. The ball is coming in our direction. Are we going to hold it or drop the catch, it’s for us to see,” said Subrahmanyam, giving an analogy from cricket to describe the opportunities for India from Trump’s tariff plans.

Subrahmanyam, who previously served as commerce secretary, said there would be disruptions in the US trade because of Trump’s tariff plans, and that would open up “huge” opportunities for India.

“The question is if we actually prepare ourselves, it can lead to a massive boom because there is going to be trade diversion,” he told reporters at an event to release a NITI Aayog report on India’s foreign trade titled ‘Trade Watch Quarterly’.

Trump, who is set to begin his second term as the US president on January 20, recently unveiled plans to impose higher tariffs on imports from China, Mexico and Canada. He has announced the imposition of 25 per cent tariff on all Mexican and Canadian imports and an additional 10 per cent tariff on Chinese imports. Trump’s tariff plan is most aggressive against China. The new 10 per cent tariff will be in addition to the previously pledged 60 per cent tariff on imports to the US from China.

The US president-elect has also proposed anywhere from 10 to 20 per cent tariffs on imports from other countries.

NITI Aayog member Arvind Virmani said the 10 per cent tariff would not have any significant impact on India’s exports to the United States. According to Virmani, the impact of high tariffs would be partially offset by the exchange rates movement.

The US is India’s largest trading partner. The trade balance has been in favour of India, with a surplus of over $35 billion recorded in the financial year ended March 2024. The value of India’s exports to the US stood at $77.51 billion, imports at $42.2 billion during the financial year 2023-24.

“Our relationship with the US is multi-dimensional. It is very deep. It’s not standing only on one leg, which is trade, there are many other dimensions,” Subrahmanyam said in response to a question related to the impact of Trump’s tariff plan on India-US relations.

Meanwhile, in its ‘Trade Watch Quarterly’ report NITI Aayog underlined that unlike its South Asian peers – Vietnam, Thailand, Cambodia, and Malaysia, India has had limited success in capturing the full potential of the "China Plus One" strategy so far.

On the US-China tensions in the areas of trade technology, the report noted: “For India, this situation presents both challenges and opportunities. On the one hand, India has to navigate the disruptions in the global supply chain, and be wary of China dumping its products in Indian markets. On the other hand, India is seen as an attractive destination for companies looking to shift their manufacturing bases out of China.”

“This shift offers India a chance to enhance its domestic manufacturing capabilities, particularly in high-tech industries. However, India has seen limited success so far in capturing the China-Plus-One strategy,” it said.

“Vietnam, Thailand, Cambodia, and Malaysia have become bigger beneficiaries of the strategy. Factors such as cheaper labour, simplified tax laws, lower tariffs and proactiveness in signing Free Trade Agreements (FTAs) have played a critical role in helping these countries expand their export shares,” NITI Aayog noted in the report.

(FILES) Former US President Donald Trump attends his trial for allegedly covering up hush money payments linked to extramarital affairs at Manhattan Criminal Court in New York City on May 7 2024. US President-elect Donald Trump