‘Make in India’ campaign may wilt under US pressure

By Hu Weijia Source:Global Times Published: 2019/2/11 22:05:27

US President Donald Trump's trade policy won't only affect China while leaving India unaffected.

After sinking into the trade conflict with China, the US is reportedly considering a possible withdrawal of zero tariffs for India. 

According to Reuters, the US Trade Representative is completing a review of the country's trade concessions to India, under which the emerging economy now enjoys zero tariffs on $5.6 billion of exports to the US.

With the "Make in India" campaign initiated by the Modi administration, India is in a period of rapidly developing industrialization. If all goes smoothly, India's trade surplus with the US will continue to widen. This will be impossible for the US to turn a blind eye to at the same time as Trump complains that the US buys more from China than China buys from the US.

If India wants to make itself the next world factory after China, the country will soon or later feel the chill of an economic conflict with the US under Trump's trade policy. The more successful the "Make in India" campaign is, the sooner US protectionist tariffs will come.

Compared with the trade conflict between China and the US, bigger trouble lies in store for India. In the initial stage of its industrialization process, India urgently needs the US market. 

Although made-in-India products have begun to enter Americans' lives, a stable customer base has not yet been established. India's exports to the US may suffer a blow if the US increases its tariffs on those products.

Trump's trade policy is having a profound effect on the global value chain and will result in global manufacturing redistribution. India, an emerging but still relatively underdeveloped manufacturing country, has less endurance than China for a trade conflict amid a redistribution of global manufacturing investment and capacity. 

As India and Southeast Asian countries like Vietnam engage in fierce competition for investment in the manufacturing sector, Trump's trade policy has added further uncertainties to India's manufacturing growth.

Ahead of a general election due by May, Indian Prime Minister Narendra Modi is facing growing discontent as people question whether his reforms can create enough jobs for Indian youth. If US tariffs hit India's manufacturing sector and drive up the unemployment rate, the Modi administration will feel more pressure from the Indian public as the vote is coming closer.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn

Posted in: EYE ON ECONOMY

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