In an escalating trade war triggered by the US President elect Donald
Trump with Mexico and China, India may
find itself in the cross fire with collateral damage to its economy,
particularly to sectors such as information technology and select goods exports
to the American market, an ASSOCHAM Paper has said, says a release on 8 Jan
“Though China and Mexico are in direct firing line of Donald Trump, India
needs to watch out and must build bridges with the upcoming American
administration and assuage the concerns about the American jobs,” the chamber
said on a status paper on the regime change in the US.
Those who thought the Trump threat to the American companies against job
outsourcing to China and Mexico , particularly in the manufacturing, was only
an election rhetoric are in a for a rude shock. “The Trump threat to protect
the US interest in an inward looking manner is for real now. The manner in
which Ford has announced scrapping of its USD 1.68 billion plan to set up a
manufacturing plant in Mexico shows that Trump means business when it comes to
carrying out the threat of heavy border tax on the US firms which, as he calls
it, ship the jobs abroad,” the paper said.
ASSOCHAM said, “India should not sit and watch the trade war among the big
economies, mainly the US and China from the sidelines. We must take pro-active
steps to ensure that we remain on the right side of the upcoming US
administration; or else the impact could be on the Indian services exports to
the American firms.”
According to the paper, the collateral damage for India would not only come
from the US but also from China. “With its economy being aggressively export
driven, particularly in manufacturing, China would look for alternative export
destinations outside the US in Europe and Asia. In the coming months, after
inauguration of Trump to the White House, China would double up dumping of its
goods to countries like India as it gets entangled with the US over trade
barriers,” it said.
The dumping from China has been quite severe in the recent few years in
areas like steel aggravating the problems of the Indian industries.
Under the given circumstances, the Indian government along with trade
bodies like apex business chambers, influential think tanks, opinion leaders
and a large diaspora must work for an effective lobbying to explain to the US
policy makers as to how free trade, more so, in services would help both the US
and the Indian companies.
“If the US gives jobs to Indians in back-end operations, India gives a huge
market to the giants like Google, Microsoft and Intel who are all now looking
at the digital expansion in the Indian economy. So, it is a win-win situation
for both the countries,” the ASSOCHAM Secretary General said. India imports as significantly as it exports
to the US in goods and services.