The Indian textile sector is experiencing a significant downturn as a surge in cheap Chinese imports of viscose yarn disrupts local manufacturers, raising concerns about trade imbalances and competition amidst escalating tensions with the US.
India Faces Trade Challenges as Chinese Imports Increase Amid Tensions With US
India Faces Trade Challenges as Chinese Imports Increase Amid Tensions With US
Indian textile industry struggles as cheaper Chinese imports flood markets; concerns rise over trade imbalances and competition.
The pace at Thirunavkarsu's spinning mill in Tamil Nadu has noticeably slowed, as demand for viscose yarn – a crucial material in garment production – declines sharply. Orders have plummeted by nearly 40% within the past month as Chinese imports have become 15 rupees ($0.18; £0.13) per kilo cheaper, inundating Indian ports.
With the recent imposition of tariffs up to 145% by Donald Trump on a range of Chinese goods, manufacturers in China are looking for new markets, and India has become an attractive target. Local textile producers argue that these dumped Chinese yarns threaten their businesses, with mill owners fearing their products cannot compete due to higher production costs.
Jagadesh Chandran from the South India Spinners Association noted that small spinning mills in key regions are already curtailing production, and many may be forced to shut down if the trend continues. In an effort to address these challenges, India implemented a 12% tax on select steel imports to curb the inflow of cheap goods, particularly from China.
Although China's Ambassador to India, Xu Feihong, insists that his country will not engage in market dumping and is keen on purchasing more high-quality products from India, the anxiety about such practices persists across multiple industries. As the world's largest exporter of industrial goods, China's actions could significantly impact Indian economic stability.
The trade deficit with China has surged to $100 billion (£75 billion), exacerbated by a 25% increase in imports in March, primarily driven by electronics and solar cells. To respond to these concerns, India's trade ministry has established a committee focused on monitoring the situation regarding Chinese imports, particularly viscose yarn.
Despite attempts by the Indian government to galvanize local manufacturing and reduce reliance on Chinese goods, progress has been slow. Economic experts point out that the country's industrial growth is not translating into reduced imports, but rather escalating them. This presents structural challenges for India's economy, including rising trade deficits tied to increasing imports without a corresponding rise in exports.
As global dynamics shift, particularly with the increasing tensions between the US and China, industry observers stress the need for India to strengthen its domestic competitiveness. With Chinese exports still surging while Indian exports to China dwindle, the call for urgent action is evident.
Reestablishing a constructive dialogue with China regarding dumping practices may prove essential for India as it navigates a precarious trade landscape. The need to address these issues is critical for sustaining economic stability and growth in India's future.
