NEW DELHI: India's commerce minister Suresh Prabhu and his Chinese counterpart Zhong Shan are putting their heads together in Delhi on Monday in a Joint Economic Group (JEG) huddle.
The meeting is set in an interesting premise with newer dynamics shaping the global trade scenario. Since the turn of this month, United States (US) President Donald Trump has hiked import tariffs on two separate occasions, according to a report by https://timesofindia.indiatimes.com.
Early on in March, the tariffs were hiked on steel and aluminium imports- which would have its bearing on both India and China. Last week, US struck an even more decisive blow on China by imposing new tariffs on $60 billion worth of Chinese technology and consumer goods.
On the other hand, Chinese Premier Li Keqiang, at the close of the world's second largest economy's annual parliament session, said that they would open their economy further -- so that foreign and Chinese firms can compete on an equal footing.
At 16.13 per cent, India ships the largest share of its exports to the US. Alternatively, 3.42 per cent of the exports go to China, making it the fourth-highest importer of Indian products.
The new tariffs imposed by the Trump administration on steel and aluminium bring with it an added twist. Only 5 per cent of India's exports to the US are metals, of which around 3 per cent accounts for steel. However, data from the commerce ministry's website shows that there has been a jump of 41.60 per cent in India's steel and iron exports during April 2017- January 2018, as compared to the corresponding period in the last financial year. On the other hand, stones and glass which are India's top exports to the US have seen a sluggish pace of growth. The precious and semi-precious stone sector has, in fact, seen an 8 per cent negative growth during this period.
As far as China is concerned, organic chemicals, India's top export to the Asian superpower has seen a 16.75 per cent growth in April 2017- January 2018 period. But, trade with China is largely a skewed proposition. India's trade deficit with China has widened in the last three years (see graph), and sobering the same will be on agenda when the commerce ministers of the two countries meet on Monday.