India Confronts Chinese ‘Dumping’ Amid Ongoing Trade Tensions from Trump’s Era

The textile industry in India is facing significant challenges as demand for locally produced viscose yarn has plummeted by nearly 40% in just a month. This decline is largely attributed to a surge in cheaper imports from China, which have become more affordable due to recent trade tensions. As Indian manufacturers struggle to compete with these low-cost imports, concerns are growing about the long-term viability of local spinning mills.

Impact of Cheaper Chinese Imports

The spinning mill owned by 64-year-old Thirunavkarsu in Tamil Nadu has experienced a noticeable slowdown in operations. The viscose yarn he produces, essential for woven garments, is now accumulating in storage due to a sharp decline in orders from local factories. The influx of cheaper Chinese yarn, which has dropped in price by 15 rupees (approximately $0.18) per kilogram, has flooded Indian ports, making it difficult for local producers to compete. Thirunavkarsu expressed his concerns, stating, “We can’t match these rates. Our raw material is not as cheap.” This sentiment is echoed by other mill owners who fear that their businesses may not withstand the pressure from these imports.

Jagadesh Chandran, a representative from the South India Spinners Association, highlighted that nearly 50 small spinning mills in key textile hubs are slowing production. Many of these mills may be forced to reduce operations further if the situation does not improve. The competitive landscape has shifted dramatically, leaving local manufacturers in a precarious position as they grapple with the consequences of international trade dynamics.

China’s Response and Trade Dynamics

In response to the growing concerns about market dumping, China’s Ambassador to India, Xu Feihong, has assured that China will not engage in practices that disrupt other countries’ industries. He emphasized a desire to purchase more high-quality Indian products for Chinese consumers. However, skepticism remains among Indian manufacturers, who worry about the broader implications of China’s status as the world’s largest exporter of industrial goods.

The trade tensions between the United States and China have led to significant tariffs on Chinese goods, prompting Chinese manufacturers to seek alternative markets, including India. This shift has resulted in a sudden influx of cheap goods, which experts warn could be “very disruptive” to emerging economies in Asia. The World Trade Organization has recorded a surge in investigations against unfair Chinese imports, with India filing a notable number of complaints.

India’s Trade Deficit and Government Response

India’s trade deficit with China has ballooned to $100 billion, exacerbated by a 25% increase in imports in March, particularly in electronics and solar cells. In an effort to address these challenges, India’s trade ministry has established a committee to monitor the influx of inexpensive Chinese goods. Additionally, the government has implemented a 12% safeguard duty on certain steel imports to mitigate the impact of cheap shipments from China.

Despite these protective measures, India’s reliance on Chinese raw materials and intermediate goods remains high. Experts have noted that the government’s initiatives to boost local manufacturing have had limited success, as imports continue to rise even amid heightened border tensions with China. The challenge lies in bridging the competitiveness gap to reduce dependency on Chinese imports while fostering domestic industrial growth.

Future Outlook and Industry Concerns

As multinational companies like Apple look to diversify their supply chains away from China, India still finds itself heavily reliant on Chinese components for manufacturing. This dependency has contributed to a worrying trade imbalance, with exports to China falling below 2014 levels. Analysts warn that the current trajectory could hinder India’s industrial growth and exacerbate its trade deficit.

Industry experts emphasize the need for India to address its competitiveness issues urgently. The opportunity presented by U.S.-China trade tensions could be pivotal for India, but without significant improvements in domestic manufacturing capabilities, the country risks being overwhelmed by cheap imports. As concerns about Chinese dumping grow, it is crucial for India to engage in constructive dialogue with China to address these issues and safeguard its industries.

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