NEW DELHI: With Donald Trump threatening to impose additional duties against China and Mexico, government has launched a multi-pronged exercise, which seeks to identify areas where India can tap into an opportunity but is also keeping close tabs on currency movement.
While the recent depreciation of rupee is seen to be helpful in making Indian goods more competitive, a lot will also depend on how other currencies move. Official sources told TOI that all eyes are on China as a steep depreciation of the yuan could help the Asian giant counter some of the impact of the additional tariffs that the Trump administration imposes.
Since October-end, rupee has weakened around 0.7% against US dollar, while the Chinese currency has seen a near 2% depreciation. Several other currencies have weakened even more. The jury is, however, divided on the extent of China’s benefit from depreciation.
While govt officials keep tabs on Trump’s next set of moves, they are breathing easy as India has not yet figured in the US president-elect’s trade war calculations. But, they are not ruling out the possibility of steps coming in the future, which many believe will be a negotiating strategy by the new US administration to get India to offer some concessions to American goods.
For the moment, the commerce department is assessing sectors, where India can gain from actions being taken against China, as well as Chinese companies. Textiles, electronics goods and pharma are among sectors, where govt is assessing the capacity that manufacturers in India have and if they can ramp it up to tap into any opportunity in future. Sectors, such as textiles and garments, are seen to be especially lucrative as the recent tension in Bangladesh could also help Indian players.
“We have seen an increase in mobile production in India, which is also catering to export demand. Similarly, there is a need to push the production of laptops and personal computers in In dia, which can also meet demand in other countries, especially as China faces pressure,” a senior official told TOI. India will, however, have to compete with countries such as Vietnam to grab a bigger share of the American pie.
In last fiscal year, the US was India’s largest trading partner with bilateral trade of almost $120 billion. With exports of $77.5 billion, India had a trade surplus of over $35 billion, according to commerce department data. According to US data, India had the seventh highest trade surplus, with Trump’s recent threat focused on the top three countries with a favourable balance of trade – China, Mexico and Canada.
Government officials have said goods trade numbers need to be looked at along with services, where the US enjoys significant advantages.
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