India’s Engineering Export Promotion Council (EEPC) on Sunday expressed hope that trade tensions between the US and China does not escalate as these nations are among the top destinations for Indian engineering exports.
According to data compiled by EEPC, Indian engineering exports to the US, which the number one destination for such goods, had gone up by over 47 per cent and to China by 76 per cent during 11 months (April-February) of the last financial year ended March 31.
“Our stakes are quite high in the unfolding global trade tensions between the US and China. We would not like to be caught in the cross-fire,” EEPC Chairman Ravi Sehgal said in a statement here.
He said rising import tariffs in the wake of US presidential action on steel and aluminium as also the complaint filed against India by the US in the World Trade Organisation (WTO) with regard to various export promotion schemes will be challenging issues for the Indian export sector.
Last month, US President Donald Trump imposed import tariffs of 25 per cent on steel and 10 per cent on aluminium, unfolding the prospect of an all-out global trade war.
India’s engineering exports to the USA between April-February 2017-18, have gone up to $21 billion, from $6.25 billion a year ago with a growth of 47.3 per cent, an EEPC statement said.
“Though smaller in value terms, the engineering shipments to China witnessed an impressive expansion from $1.62 billion to $2.8 billion for the same period. China remains the fourth largest export destination for the Indian engineering exports.
“Even from the monthly perspective, the US continued to be the top most exporting destination for India’s engineering products in February 2018. Major items of exports to the US include products of iron and steel, industrial machinery, non-ferrous metals, automobiles.”
In this connection, industry chamber Assocham has said that an annual trade deficit of as much as $150 billion with the US alone does not allow India room to retaliate in the event of a global trade war being unleashed by recent protectionist trends in the developed world, since the country’s imports are mostly of an essential nature.
“We cannot flex too much of our importing muscle, even if our exports face consequences of trade war and are subjected to tariff barriers.
“So, the best course would be to keep engaged with the major trading partners, without aligning ourselves too much into a single bloc,” an Assocham statement said.
The industry lobby suggested that in cases where exports are affected, India must engage bilaterally and use the channel of the WTO.
It has also said that a full-scale global trade war will damage the Indian economy, impacting the country’s exports and widening its current account deficit.
Following a WTO mini-ministerial meeting held here last month, which was attended by over 50 countries, Commerce Minister Suresh Prabhu said India would bilaterally take up the issue of recent protectionist measures imposed by America.