India losing trade ground? China crucial for manufacturing exports, says Niti Ayog CEO; tariff cuts needed on key inputs

Subrahmanyam emphasised that strengthening trade relations with China is crucial for enhancing India’s manufacturing exports, particularly as Asia emerges as a key driver of global economic growth. This assessment was shared during the release of the quarterly Trade Watch report, as cited by Reuters.

“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, highlighting China’s significance in India’s export landscape, as quoted by Reuters.

Following US President Donald Trump’s decision to increase tariffs on Indian products to up to 50% from August 27 due to Russian oil buys, Prime Minister Narendra Modi’s administration is working to expand export markets and reduce manufacturing expenses.Trade figures show India’s exports to China decreased by 7% to $15.1 billion in 2024, while imports grew by 10% to $109.4 billion, driven by increased buys of electronic goods and chemicals.The analysis revealed India’s underperformance in crucial sectors, including leather and footwear, where exports reached $5.5 billion in 2024, representing merely 1.8% of the $296.5 billion global trade volume.The report further noted that India has yet to significantly penetrate the non-leather footwear market, valued at about $110 billion globally.

“India imposes 10% tariffs on key footwear inputs, while Vietnam and Italy levy near-zero rates,” the report indicated, suggesting tariff reductions to enhance competitiveness.Lead author Pravakar Sahoo observed that despite similar Chinese sourcing patterns, Vietnam’s lower duties provide its manufacturers with a competitive advantage, noting that India’s high tariffs on plastics and vulcanised rubber sheets diminish its products’ market competitiveness.