As trade tensions escalate between Western nations and China, India faces the looming threat of becoming a dumping ground for Chinese electric vehicles (EVs) and batteries. The recent tariff hikes imposed by the United States and the European Union on Chinese imports could pave the way for a surge of Chinese goods flooding into the Indian market, according to warnings from the Global Trade Research Initiative (GTRI).
Escalating Trade Conflict
The United States and the European Union have significantly raised tariffs on Chinese EVs and batteries, with the US imposing nearly 100 per cent duties on these items. GTRI highlights that these tariff increases may prompt China to redirect its exports to alternative markets, including India, as a means to bypass the Western tariffs.
“Both the USA and the European Union (EU) are cutting imports of Electric Vehicles from China. The raising of tariffs on EVs, batteries, and many other new technology items by the US may push China to dump these products in other markets including India,” states the GTRI statement.
Implications of Tariff Hikes
The US government’s recent announcement of steep tariff hikes on various Chinese imports, including EV batteries and computer chips, further exacerbates the trade conflict with Beijing. The White House cites “unacceptable risks” to domestic economic security from China’s trade practices, accusing China of flooding global markets with cheap goods.
GTRI underscores that these tariff hikes may exceed the US’s bound duty commitments at the World Trade Organization (WTO), potentially violating WTO rules. The American government defends these increases under the seldom-invoked National Security clause.
India’s Response and Challenges
The outlook for India is less optimistic, particularly for products like EVs and semiconductors, where the country remains a net importer. GTRI emphasizes the necessity for India to remain vigilant to prevent the influx of dumped Chinese goods, which could disrupt its domestic market.
In an effort to attract investment in the EV sector, the Indian government recently introduced a policy slashing import taxes on certain models from 100 per cent to 15 per cent, provided manufacturers invest at least $500 million and establish local factories.
“The US and European Union (EU) are taking active measures to cut reliance on China. With stagnant exports and rising imports from China, India may also need a China strategy,” concludes GTRI.
As India navigates the complexities of global trade dynamics, proactive measures will be essential to safeguard its domestic industries and ensure a level playing field in the face of increasing competition from Chinese imports. Vigilance, strategic policymaking, and international collaboration will be critical in addressing the challenges posed by the evolving trade landscape.
