November 01, 2018

How India should play the trade war

Research Director and Senior Fellow, Niranjan Rajadhyaksha writes in Mint on what India's strategy to take advantage of the trade war should be. Excerpts below:


"The recent surge in proposals for greenfield foreign direct investment in some Asian countries should pique the interest of all those who ask whether India can benefit from the intensifying trade war between the US and China. The United Nations Conference on Trade and Development released data last month that shows how international firms have announced plans to pour money into new projects in Indonesia ($28 billion), Vietnam ($18 billion) and the Philippines ($12 billion). It is quite likely that these new greenfield investment proposals—that come in the midst of an overall decline in global foreign direct investment—could be because international firms are trying to relocate parts of their supply chains to other countries in the region, as Donald Trump turns the screws on Chinese mercantilism.


There are lessons for India here. Indian policy makers have been trying to figure out how to gain strategic advantage from the trade war between the two largest economies in the world. The first task is to identify the opportunities. India has few manufacturing capabilities in many of the largest items in the US import bill—mobile phones, telecom equipment, household appliances, toys, televisions, semiconductors, industrial machinery. Where India can get into the game is in sectors such as textiles, clothing, auto components and certain types of chemicals, a government official told me. A similar exercise can be carried out with respect to what China imports from the US. But that is not all."


Read the full article here.

Topic : State Capacity / In : OP-EDS
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