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India stands to benefit out of global trade growth when tension in trade war eases

Whether the tension in the trade war between China and the US will ease of with China’s plan of cutting tariff on cars or not, any easing in the trade war will raise the prospects of global trade which would mean that India stands to benefit, according to the trade analysts. 

 A clearer picture on gains to India will emerge only when China announces details of its plans, said the analysts. 

EEPC India chairman Ravi Sehgal said: “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.” He said India’s engineering exports to the US, its biggest market, went up 47% to $9.21 billion between April and February of 2017-18 from a year earlier. Though smaller in value, engineering goods shipments to China witnessed an impressive expansion to $2.8 billion during the April-February period from $1.62 billion a year before. 

Ajay Sahai, director-general at FIEO, called for widening Indian production basket of value-added products to better capture the Chinese market. 

Before the trade war, the WTO’s quarterly outlook indicator had showed in February that global trade in goods will continue growing above trend during the second quarter. “The recovery of 2017 seems to be extending into the first quarter of 2018 at least, based on things like strong export orders, strong air freight and container shipping and other indicators. So it seems like there hasn’t been any slackening of momentum.” The WTO forecast overall growth in world goods trade will most likely be around 3.2%, compared to an estimated 3.6% in 2017. 

Late last month, in a meeting of trade ministers of India and China and other officials, both the countries agreed to re-negotiate a bilateral investment agreement, apart from working on a road map to reduce the massive trade imbalance in favour of the world’s second-largest economy.

China has also pledged to look into the sticky issue of greater market access to Indian farm products and agreed to resolve any issue that hurts the prospect of Indian pharmaceutical exports to that country.

 

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