US-China trade war likely to boost India’s exports by $10 billion: UNCTAD

India will emerge as one of the largest beneficiaries of the trade war between the US and China with a potential increase in exports up to $10 billion or 3.5% of its exports, the UN Conference on Trade and Development (UNCTAD) said on Tuesday.

Most of India’s increase in exports due to trade diversion is expected to be to the US with a smaller increase in exports to China as well.

European Union exports are those likely to increase the most, capturing about $70 billion of the United States-China bilateral trade ($50 billion of Chinese exports to United States, and $20 billion of United States exports to China). Japan, Mexico and Canada will capture above $20 billion.

An Indian commerce ministry official said they have been prodding India exporters to take advantage of the rising trade tensions between the US and China. However, he points out a problem: “There are items such as electricity parts and switches which small-scale industries produce in India. We have become cost-competitive in such items, but we don’t have the production capacity. Nobody would like to expand capacity through fresh investments, as we don’t know how long these sanctions will last."

On Tuesday, commerce secretary Anup Wadhawan held a meeting of the export promotion councils to examine various difficulties faced by exporters. India is targeting to take its merchandise exports to $325 billion in 2018-19 from $303.5 billion a year ago, a 7% growth. In the period April to Dec 2018 in FY2018-19, merchandise exports have grown by about 10% over the same period in the previous financial year.

After achieving a turnaround from the initial shock and reaching a peak export figure of $314.4 billion in 2013-14, India’s exports came under immense pressure again in the post 2013-14 period due to the global economic and financial turmoil.