India's missed trade opportunities as others gain from US-China tensions

India has not been able to attract a notably greater share of global FDI. Some of this is due to political resistance to stronger ties with China, some of it is held back by structural barriers

The US presidential elections, now a week away, could trigger a reordering in global trade, especially if Donald Trump is re-elected and ratchets up tariffs on China. This is raising expectations in India that it could benefit from an increase in US substitution demand, propelling its struggling manufacturing sector.

 

Trade tensions between the US and China aren’t new — they’ve been escalating for years, especially since a wide range of bilateral tariffs was introduced in 2018-2019. The sectors targeted by tariffs overlap heavily with goods that are also exported by India; hence, the rising hopes of a healthy trade tailwind.