Trade Tensions Between US and China Impact India's Manufacturing Sector

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New Delhi: The ongoing trade tensions between the United States and China are adversely affecting India's manufacturing sector, particularly in industries heavily reliant on Chinese imports. As Donald Trump prepares for his return to the presidency on January 20, potential trade and tariff wars loom, prompting China to implement precautionary export restrictions.

India's 'Make in India' initiative aimed to boost manufacturing across various sectors, including solar power, electronics, and electric vehicles. However, China's recent bans on crucial exports—such as gallium and germanium, essential for solar panels, and lithium for battery production—pose significant challenges for Indian firms. These restrictions affect not only exports to the United States but also other nations that rely on Chinese components for their manufacturing processes.

Economic analysts, such as Ajay Srivastava of the Global Trade Research Initiative, have noted major disruptions for Indian companies in the electronics and solar sectors. As India imported $101.73 billion in goods from China in 2023-24, the heightened trade friction underscores India's vulnerability. The Indian government previously imposed restrictions on Chinese investments following the 2020 Galwan Valley clash, leading to increased geopolitical tensions.

India's reliance on Chinese raw materials and components remains a pressing concern as manufacturers navigate these evolving trade dynamics. Stakeholders hope for a resolution that could mitigate the adverse effects of China's export limitations while strengthening bilateral trade relations.

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