Sputnik discussed this with Pravakar Sahoo, professor of economics at the Institute of Economic Growth (IEG), Delhi.
Sputnik: In what ways can the trade war between China and the United States impact the Indian markets?
So, yes, a trade war between the US and China would help India in the short-term, there may be some openings for Indian products in the American market; but in the long-term, it's not good for India. The second point is that with all these trade wars happening, particularly starting with the USA, this is to give a push to domestic production. Chinese exports have been replaced by Indian exports. This may be the same case; the US might just put tariffs on Indian products in the coming months in the same sectors.
Sputnik: What sectors of the Indian market will feel the most impact in the ongoing dispute between the US and China?
Pravakar Sahoo: We see some of the sectors that may be influenced - precious metals, textiles, garments, jeans and jewelry where India has a comparative advantage and there's competition between India and China in the US market. If the comparative advantage of the Chinese products goes down in these sectors because of tariffs, then Indian products may be more competitive in terms of price in the US. Some of the sectors could get benefits out of the trade war between the US and China.
Sputnik: Is there the potential for the demand on these products to actually increase amid this ongoing trade dispute between Washington and Beijing?
Sputnik: Some experts have noted that with the US imposing additional tariffs on Beijing, Indian products may become more competitive; is that actually the case?
Pravakar Sahoo: Yes, of course, I agree with the point that additional tariffs imposed on the same products or on different categories of products would be certainly beneficial. That would make Indian products or Indian exports more competitive. My second point is that in the short-run, maybe India would immediately benefit, it would make Indian exports more competitive, but as we go on, the US also has India on its list. All of these policies are designed to push production in the USA and they wouldn't like to have Chinese exports being replaced by Indian exports. There may be tariffs imposed on Indian products. I agree that in the short-run Indian exports could become more competitive.
Sputnik: What's your prognosis moving forward for these geopolitical events happening in terms of the trade war? Do you think that in long-run India will gain or do you think that status quo is going to be maintained and India will just have to continue as an emerging market?
Pravakar Sahoo: Trade wars were never a success, it is not a win-win situation, it is always a lose-lose situation. If the trade war goes further and there is a full-fledged trade war between the US and China, it is certainly not good for India. Why am I saying this? Because it creates uncertainty in the trade regime, in world trade. Over the last year, world trade has slowed down. Since 2011, given the growth of the world economy, world trade has not been going hand in hand. For emerging countries, all these protectionist measures were taken by the USA and [measures] to counter them - Germany, Canada and China have done that. It is not good for the emerging countries that are looking to the external market for their products.
The views and opinions expressed by Pravakar Sahoo are those of the speaker and do not necessarily reflect those of Sputnik.