Sino-US Trade War: A Boon or Bane for India?
Professor Dr. Sujit Kumar Datta
Former Chairman, Department of International Relations, University of Chittagong, Bangladesh.
And
Deputy Director, Hong Kong Research Center for Asian Studies (RCAS).
The continuous trade conflict between China and the United States has reshaped the global economic scene and offers both possibilities and difficulties for governments all around. The effects are especially complex and diverse on India, a rising economic behemoth with geopolitical ambitions. Beyond a bilateral dispute, this conflict is now a test of India's ability to adjust to a changing global scene in which strategic alignments and economic interests are tightly entwined. Long-standing issues the Trump government started to address in 2018 included the US trade deficit with China, claims of IP theft, and forced technology transfers. These problems resulted in the trade war. The tariffs imposed on billions of dollars worth of products from both sides led to global supply lines being disrupted and companies all around being left uneasy.
The basic problems of the trade battle still exist even if the Biden administration has taken a more cautious approach. The emphasis now moves from tariffs to strategic rivalry, including regional dominance, technical expertise, and robust supply networks. While China is striving to reduce its dependence on American markets and technology, the United States is trying to differentiate itself from China in important spheres. The uncertain environment this change creates is forcing companies to rethink their sourcing and investment policies. As supply chain terms "friend-shoring" and "de-risking" emerge, they point to a movement towards more geographically diversified and politically aligned networks.
Leveraging the present trade battle between the US and China, India may increase industrial capacity, draw foreign capital, and confirm its position in world value chains. Businesses are seeking to diversify their supply chains outside of China, and India offers a viable choice with its growing domestic market, low labor costs, and rising infrastructure. Its inclination fits the "Make in India" approach of the government, which aims to boost indigenous industry. India now has an opportunity to attract foreign direct investment (FDI) from companies wishing to relocate their manufacturing operations. Those in the electronics, textile, and pharmaceutical sectors stand to benefit most. India can boost its export market share by grabbing the holes created by the trade conflict between the US and China. The markets for agricultural, textile, and engineering products could see increases in their respective shares.
With the United States stressing the need to isolate technologies from China, India has an opportunity to increase its technological capability. By working with US companies in fields such as semiconductors, artificial intelligence, and telecommunications, India may hasten its technological development. The trade war has brought India and the United States further closer as a strategic ally. It is so as both countries are concerned about China's growing supremacy. This alignment might lead to further cooperation in industries like trade, technology, and the military.
Trade between India and China has been rising despite border disputes and geopolitical issues. This seemingly contradicting trend shows the complex interaction of political and economic factors. Chinese components and raw materials are mostly used in India's electronics, chemical, and pharmaceutical sectors. Given their interdependent economies, India would find it difficult to distance itself from China completely. Chinese businesses are still lured to the large and growing Indian consumer market because of the appealing pricing and varied product range these businesses provide. A major cause of concern for the Indian government is the ongoing trade imbalance between India and China. The significant imbalance shows the depth of trade ties even with efforts to minimize them. Chinese internet markets and digital services have become very popular in India, hence strengthening the nation's economic ties to China. Still, this boost in trade has little effect on fundamental geopolitical disputes. India must carefully combine its concerns about national security with its economic agenda.
Particularly in the Indo-Pacific region, the two countries' more general geopolitical competition is clearly tied to the US-China trade battle. One instance of this conflict is the competition between the Belt and Road Initiative (BRI) of China and the Indo-Pacific Strategy (IPS) under the direction of the United States. The Belt and Road Initiative (BRI) is a vast infrastructure construction and connectivity initiative that is designed to enhance China's political and economic influence in Asia, Africa, and Europe. Although infrastructure development has certain advantages, strategic dependency and debt hazards raise concerns.
India must navigate a geopolitical minefield while balancing its involvement in the IPS and the BRI. Although India has not formally affiliated with the Belt and Road Initiative, it supports several associated projects. India's foreign policy, grounded on strategic autonomy, enables the country to pursue its objectives in international relations independently of any single power bloc. Adhering to this route would allow India to engage with China and the United States while preserving its sovereignty. India must carefully combine its national security with economic management. It must address the challenges posed by China's growing influence while seeking to capitalize on the trade conflict between China and the United States. India is a staunch proponent of regional cooperation, endorsing it via organizations such as ASEAN and the Quad. India may include other states employing various platforms to address shared challenges and promote the objective of a politically and economically secure Indo-Pacific future.
The Sino-US trade war presents opportunities and challenges for India as well. India's infrastructure has to be greatly developed to maximize the opportunities offered by the trade war. Give transportation, logistics, and energy top priorities. The bureaucratic policies of India hinder foreign investment and business activity, thereby creating a long and tiresome nature. Simplifying regulations and streamlining corporate processes is really vital. India needs to address skill gaps in its workforce if it is to match the demands of modern technologically driven industries and modern manufacturing. Funding educational initiatives and vocational training is really vital.
India can capitalize on the opportunities presented by the trade conflict between the United States and China by capitalizing on its strengths and addressing its weaknesses. By achieving this, India will establish a path for its development into a global geopolitical and economic superpower in the subsequent century. India must be committed to the forward movement of the subject until its conclusion and be able to act quickly. India's future trajectory will be substantially determined by the decisions made today. India is faced with a multifaceted mosaic of opportunities and challenges as a result of the Sino-U.S. trade conflict. India has the potential to significantly benefit by leveraging its strengths, resolving its vulnerabilities, and judiciously managing geopolitical complexities. Nevertheless, the future necessitates a strategic vision, a dedication to economic reforms, and a thorough understanding of the changing global order. If India is to maintain its position in the twenty-first century, it must maintain a delicate balance between its economic objectives and its strategic demands. Ultimately, the result is contingent upon India's capacity to navigate the evolving international power landscape with prudence and resolve and to capitalize on the potential to transform obstacles into opportunities.