Indian exporters are increasingly being contacted by Chinese firms looking to route shipments through India to bypass high US tariffs, according to Pankaj Chadha, chairperson of the Engineering Export Promotion Council.
"Chinese firms are reaching out to Indian exporters to fulfil US orders. It's an opening, but also a sensitive area. Our exporters have committed to Minister Piyush Goyal that we won't engage in re-routing," Chadha told NDTV Profit in an exclusive interaction on Tuesday.
He added that exporters would consult the government to understand the terms of reference of the proposed bilateral trade agreement with the US, particularly around rules of origin and value addition thresholds.
"With differential duties on countries, the US is keen on substantial manufacturing. We'll need clarity on what that entails — HS code shifts, minimum value addition — before fulfilling such orders. If we don't, others might," he warned.
Chadha also highlighted the fierce competition Indian exporters were facing from Chinese companies in regions like Latin America and the Caribbean, as both nations attempt to de-risk from the US exposure. "It's a problem, but also a challenge we have to take up. We must claim our share of these markets," he said.
Meanwhile, fast-tracking export benefits is on the government's agenda. Chadha said the Directorate General of Foreign Trade called a meeting to discuss the Export Promotion Scheme's contours. "We'll be engaging tomorrow."
On trade negotiations, Chadha expressed hope that 25% US tariffs on steel, aluminium and auto components are scrapped in the first BTA tranche, along with progress on the UK free trade agreement by October.
India's engineering exports have already taken a $4–5 billion hit, with the June quarter expected to feel the pinch the hardest, he said. "That 25% tariff is a tough one to beat."
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