India in Wait-and-See Mode on U.S.-China Trade Developments

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The tariff war between the United States and China is being watched with trepidation in India.

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There’s no unanimous view yet on the fallout of the tariffs with respect India. Most in India are in a wait-and-see mode as things unfold.

Overall, some analysts have said the situation could be good for India, as the U.S. would now start sourcing more and more goods from other Asian countries, including India. That belief is underlined by a recent report by the Coalition for GSP, a group of U.S. companies and trade associations.

Based on official trade figures, the Generalized System of Preference (GSP) had saved U.S. companies U.S. $105 million this March, marking an increase of 36% from March 2018 and the second-highest level on record, The Asian Age reported.

But U.S. President Donald Trump’s March warning regarding removing India from the GSP list has not gone down well in Indian trade circles; the 60-day notice period ended May 3.

The report noted that Chinese imports, subject to new tariffs, were down significantly, and had risen significantly from countries like India.

For India, 97% of increased 2019 GSP imports are on the China Section 301 lists, so it is only logical that what is China’s loss is India’s gain.

But with Trump’s announcement, nobody knows what’s going to happen on this front yet.

That is specifically true on the metals front. Indian steel companies are already apprehensive that it will lead to an increase in the dumping of cheap steel into the Indian market.

The Indian steel industry has already appealed to the Indian government to impose safeguard duties of 25% to protect it from growing imports.

News agency Reuters quoted an unnamed source as saying that China’s excess steel capacity was “a concern” for India, as the former could reroute it through other countries like Vietnam and Cambodia.

The new agreement signed a few days ago between the U.S. and Canada to prevent cheap imports of both products from entering North America will only compound the problem for India.

The world’s second-largest steel producer, India turned net importer this year on March 31, 2019, according to official statistics. Along with China, other countries that export steel to India are Japan and Korea, who, incidentally, are also major exporters of steel to the U.S. and Europe.

Fearing the dumping of additional steel, a group of Indian steel companies recently met with Indian government officials asking for more safeguards. For now, with the national election just having been completed, there may not be much movement as everyone awaits the next government to get into the saddle.

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According to a World Steel Association report, India is expected to finish as the second-largest user of steel in 2020. The usage of finished steel products in India is forecast at 102.8 million tons in 2019, rising to 110.2 million tons (mt) in 2020. The country’s steel use in 2018 reached 96 million tons.

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