India can capture the Chinese commodity market vacated by US exports following the trade war between the world’s two biggest economies, a Commerce Department study has found.
The study has analysed and identified at least a 100 products where India can replace US exports to China by benefiting from the higher import duty Beijing has imposed on products originating in the US.
India can, in particular, grab a bigger share of the Chinese market for cotton, corn, almonds, wheat and sorghum, according to the study.
“These retaliatory tariffs provide a window of opportunity for enhancing India’s exports to China. The purpose of analysis is to identify such lines,” the Commerce Department said in the study.
Fresh grapes, cotton linters, fluecured tobacco, lubricants and certain chemicals, including benzene, are a few lines where the US’ exports to China are above $10 million. India too has been exporting these items to China.
“There is scope to increase our exports in these products because of the tariff differential and the substantial demand in China,” said an official in the know.
While China has imposed tariffs of 15-25% on these goods coming from the US, other countries are subject to only 5-10% duty (most favoured nation or MFN rate). Moreover, India has been granted an additional 6-35% duty concessions on the MFN under the Asia Pacific Trade Agreement, making its exports more competitive.
However, there are two categories of products that India is not exporting to China at present but to other countries and the Government sees scope to enter.
Oranges, almonds, walnuts, durum wheat, corn and grain sorghum are some products that India exports to the rest of the world except China, and the US exports to the Country are in excess of $10 million. India, as per the study, does not have access at present in the Chinese market.
Corn is of specific interest as India exported $143.6 million worth of the commodity to the world in 2017-18. China imported $600 million worth of corn during this period. While American corn is subject to 25% duty, APTA countries can get up to 100% concessions on corn exports to China.