India sees $25 billion export opportunity in U.S.-China tariff war

If U.S. initiates a tariff war with China, India may stand to gain $25 billion in additional exports, an internal analysis carried out by the Federation of Indian Export Organisations (FIEO) shows.

The potential sectors where India could replace some of the exports from China include electronics & electricals, automotive parts & components, organic chemicals, apparel & textiles, footwear, furniture & home decor, toys etc, FIEO analysis indicates. Presenting the data before Union Finance Minister Nirmala Sitharaman in a pre-Budget meeting, FIEO president wanted the government to announce a new marketing scheme just to focus on the U.S. with a corpus of ₹250 crore per year for three years (₹750 crore overall) to capitalise the opportunity arising out of a possible U.S.-China trade war.

According to FIEO study, India can replace China in various sectors based on competitive strengths, including cost-efficiency, quality, skilled labour, and manufacturing capabilities. In the consumer electronics (mobile phones, televisions etc), electrical equipment, components, and accessories segment, FIEO sees a $10 billion opportunity if U.S. decides to substitute Indian products with Chinese ones. Similarly, India, one of the largest textile manufacturers and exporters globally and has a well-established export base in the U.S. can add $ 2.5 billion as additional export earnings from the U.S. toys and automotive components are other sectors where FIEO sees $1.5 billion each of export opportunity for Indian manufacturers. The additional export earnings potential for others sectors like footwear, furniture and home decor and chemicals are estimated to be $1 billion each.

"With rising tariffs on China, India is well-positioned to benefit by stepping into sectors such as electronics, textiles, toys & games, chemicals, footwear, furniture and automotive components, among others. To maximise this opportunity, India should focus on showcasing its competitive advantages in terms of cost, quality, and sustainability while collaborating with U.S. trade associations to expand its market presence. By employing a comprehensive marketing strategy, India can tap into the growing demand for non-Chinese imports in the U.S. market," Ashwani Kumar, president, FIEO says.

In the pre-Budget interaction with the finance minister, FIEO president also sought the continuation of interest equalisation scheme to provide a level playing field to Indian exporters. The federation sought government support to invest in research and development, and create a domestic shipping line of global repute.