India following US President Donald Trump footsteps is showing signs of adopting protection measures against China to pressure China into addressing the growing trade imbalance between the two countries in hopes of pleasing the US.
According to the experts India is gaming in a risky field as trade benefits from US are unlikely and the current initiatives will undermine efforts that will boost trade with China.
India’s department of Commerce has recommended tariffs as high as 25% on solar and modules imported from China for a 2 year period.
Indian government is also raising concerns over its trade deficit with China and claimed that China has put restrictions on visas for exports of Indian IT services, Indian professionals, medicines, meat and rice to China.
According to a report by Indian Department of Commerce’s Directorate General of Trade Remedies said the tariffs could “mitigate” the damage that surging imports of solar cells and modules had inflicted on Indian producers.
The proposal still needs approval by the Indian Government and even if the Indian government goes ahead with the tariffs, the impact in China will be very oblique.
By this move India hopes to remedy its trade deficit of $62.9 billion in 2017 with China and hopes by siding with America they will get an exemption from US tariffs on steel and aluminum.
To reduce its trade deficit with China, India should focus on improving its competitiveness of domestic industries rather than imposing tariffs.