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India Falls Behind Rivals as US Diverts Trade from China: Study

According to a recent study, India’s attempts to use the US-China trade conflict to strengthen its manufacturing sector have not produced notable outcomes. According to Oxford Economics, China’s proportion of US imports fell by over 8 percentage points to less than 14% between 2017 and 2023, while India’s share increased by just 0.6 percentage points to 2.7%. On the other hand, Vietnam became the largest benefit in the region as its proportion of US imports increased by 1.7 percentage points to 3.7%.

Other Asian countries, like South Korea and Taiwan, additionally helped more from the exchange redirection than India. South Korea’s extent of US imports expanded by 0.7 percentage points, while Taiwan’s expanded by 1 rate point.

Prime Minister Narendra Modi’s efforts to restore India’s faltering manufacturing area, which has been stagnating at 17% of Gross domestic product for over a decade, are hampered by these measurements. Concerns are likewise brought up in the exploration with respect to India’s true capacity for significant advantages if Donald Trump wins re-appointment and forces his proposed 60% tax on Chinese products.

Alexandra Hermann, an economist at Oxford Economics, said, “The US-China trade war has improved India’s export prospects only marginally, disappointing expectations that it could drive significant growth in the country’s manufacturing sector.” “India’s export strengths are primarily in traditional sectors, where competition is fierce and growth potential is constrained.”

India’s reliance on Chinese imports for parts has expanded, even though it has gained ground in expanding its products of electronic merchandise to the US. Around 33% of India’s imports in 2023 came from China in businesses like electronics, machinery, and pharmaceuticals. Up to 67% of India’s imports of specific semiconductor devices come from China.

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According to the paper, India’s reliance on the US makes it susceptible to trade restrictions from the US, since other countries such as Vietnam have already experienced an increase in US protectionism. Furthermore, even while FDI flows to China are still declining, India has not been able to draw in a larger share of the world’s FDI.