Lok Sabha Question No. 1734 (UNSTARRED), answered on 2020-03-02
Subject: Impact of US-China Trade War on Indian Economy
Ministry: FINANCE
Asked by: Ajay (Teni) Misra

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO. 1734 TO BE ANSWERED ON MARCH 02, 2020

## IMPACT OF US-CHINA TRADE WAR ON INDIAN ECONOMY

† 1734. SHRI AJAY KUMAR MISRA TENI:

Will the Minister of FINANCE be pleased to state:

- (a)  whether  the  Government  has formulated/proposes to formulate any concrete policy to keep the country's economy intact keeping in view the impact on the Global economy due to the ongoing trade war between the United States and China; and
- (b)  if so, the extent to which country's economy will be saved from the counter effects of the trade war between China and United States?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ANURAG SINGH THAKUR)

(a) and (b): The trade tensions between China and the USA contributed to the decline of world output and trade. However, there are hopes of improved global sentiment following the 'Phase One' US-China trade deal, with the associated partial rollback of previously implemented tariffs and  a  truce  on  new  tariffs.  The  recent  moderation  in  India's  growth  coincides  with  this deceleration in growth of global output, as estimated by IMF.

Amidst an uncertain global trade environment, Government of India has undertaken a number of steps  in  2019-20  to  boost  exports  and  overall  growth  in  the  economy.  Some  of  them  are introduction of new scheme for Reversion of duties and taxes on exported products; approval of Special Economic Zones (Amendment) Bill, 2019; launching of NIRVIK Scheme for higher export credit disbursement; setting up of an Investment Clearance Cell to provide end to end facilitation; etc.  Further,  Government has identified potential trade lines of strength for India so as to take advantage of the tariff arbitrage. Series of meetings were undertaken with the Export Promotion Councils, Trade Bodies, Indian exporters, and other stakeholders to sensitize them periodically to boost exports of the specific lines where US products now face higher tariffs in China and vice versa, and where India is a strong exporter. In addition, Government is also exploring a ChinaPlus-One  strategy  in  wake  of  the  ongoing  US-China  trade  conflict.  In  coordination  with  its Missions abroad, Roadshows on 'Opportunities for India in the wake of US-China Trade standoff', are being organized in perusal of the China-Plus-One Strategy.

These  measures  are  expected  to  strengthen  India's  export  demand  and  improve  its  overall growth. There is an increase in the total Indian exports to China and USA during last one year. The  data  on  overall  exports  to  USA  and  China  is  shown  in  Table  1  below.  Among  various domestic  and  global  factors,  it  can  be  partly  attributed  to  the  fact  that  certain  Indian  products became competitive in US market, where they were competing with Chinese products and vice versa in Chinese market, as a result of US-China tariffs.

Table 1: India's Exports

|                          |   2016-17 |   2017-18 |   2018-19 |   2018-19 (Apr-Jan) (R) |   2019-20 (Apr-Jan) (A) |
|--------------------------|-----------|-----------|-----------|-------------------------|-------------------------|
| India's Exports to USA   |      42.2 |      47.9 |      52.4 |                    43.3 |                    44.8 |
| India's Exports to China |      10.2 |      13.3 |      16.8 |                    13.8 |                    14.6 |

Source: DGCI&S.   Note: R: Revised. A: Alert

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(in US$ billion)