India May Gain From US' Tariff Action On China, Canada, Mexico

India may stand to gain from the proposed tariff action by the US on manufacturing powerhouse China, as well as neighbouring countries Canada and Mexico, according to a government official.

Earlier this week, US President-elect Trump launched a tariff of 25% on Canada and Mexico and 10% on China, which will be imposed after he assumes office in January. During his election campaign, Trump had also singled out India, alleging that, among all major countries, it imposes the highest tariffs on foreign products and had vowed to introduce a reciprocal tax if elected to power.

However, India will gain if the tariffs proposed on the mentioned countries go through, the official quoted above said. Such a move could lead to more manufacturing shifting out of China—relocating possibly to India, in an effort to circumvent these duties.

Last month, ace investor Mark Mobius had echoed this. If Trump moves ahead with this plan, then a lot of manufacturers would shift out of China to escape the 60% levy of tariffs on their goods in the American market, Mobius had said.

"Then, naturally, the next logical place for manufacturing is India because you have a strong population, low-cost labour and software companies that are doing well," the founder of Mobius Capital Partners LLP had said.

The government official added that India and the UK's free trade agreement talks are also slated to resume by the fourth week of January.

The resumption in trade talks would pave way for several unfinished agenda of the deal ranging from goods, services, investments, and intellectual property rights.

Under the proposed FTA, India has demanded for greater access in terms of work visas for its skilled professionals in IT and healthcare sectors in the UK market, besides market access for several goods at nil customs duty.