India’s trade strategy risks lagging without China focus, says government think tank chief

NEW DELHI: India’s trade strategy could fall behind in global markets unless it expands exports to China and lowers import tariffs on raw materials, the head of a government policy think tank said on Monday.

With Asia set to drive global growth, engaging with China was essential to boost India’s manufacturing exports, said B.V.R. Subrahmanyam, CEO of NITI Aayog, a government policy think tank, while releasing the quarterly Trade Watch report.

“If you don’t focus on Asia, if you are not able to sell much to China, it is pointless because it’s a $15 trillion economy. You can’t avoid that economy,” he said at a press briefing, underscoring China’s critical role in India’s exports.

Prime Minister Narendra Modi’s government is seeking to diversify exports and cut manufacturing costs after U.S. President Donald Trump doubled tariffs on Indian goods to as much as 50% from August 27 over Russian oil purchases.

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India’s exports to China fell 7% in 2024 to $15.1 billion, while imports rose 10% to $109.4 billion on higher shipments of items such as electronic goods and chemicals.

The report underscored India’s weak performance in key sectors such as leather and footwear, where exports stood at $5.5 billion in 2024, just 1.8% of global trade worth $296.5 billion.

Non-leather footwear, a global market valued at about $110 billion, remains largely untapped.

“India imposes 10% tariffs on key footwear inputs, while Vietnam and Italy levy near-zero rates,” the report said, recommending tariff cuts to boost competitiveness.

With similar reliance on China for sourcing, Vietnam’s lower duties give its producers a cost edge,” said lead author Pravakar Sahoo, adding that high tariffs on plastics and vulcanised rubber sheets make Indian products less competitive.