Some China-based companies, hit by heavy tariffs imposed by the US, are now approaching Indian exporters to fulfill orders for their American customers and retain their customers amid the global trade war. News agency Bloomberg gave this information in a report. At the ongoing Canton Fair (the world’s largest trade fair) in Guangzhou, several Indian companies have been approached by Chinese companies. Ajay Sahai, director general of the Federation of Indian Export Organizations (FIEO), said in an interview that Chinese companies have proposed to Indian firms to supply goods to their American customers. In return, Indian companies will give Chinese companies a commission from the profits from the sale.
Indian exporters hope to get new orders
Most Chinese exports to the US are now subject to a tariff of 145%. In comparison, goods shipped from India to the US are currently taxed at 10%, which could rise to 26% in July if US President Donald Trump implements his reciprocal tariff policy after a 90-day moratorium.
During Trump’s first term, when Chinese exporters faced tariffs, many companies turned to Southeast Asian countries like Vietnam. Some set up factories there, while some sent their goods to the US via countries like Thailand. However, this time, Trump has imposed a retaliatory tariff of 46% on countries like Vietnam as well. In such a situation, Indian exporters have an opportunity that more orders sent to the US can now shift towards them.
Supply goods through co-branding
However, unlike Southeast Asia, the Indian government has imposed restrictions on Chinese investment, making it difficult for Chinese companies to set up factories in India or ship goods to the US via India. Ajay Sahai said that Chinese companies approached Indian firms at the Canton Fair and proposed to supply goods to US companies under their brands or through co-branding with Indian companies.
According to Sahai, most of the queries came from sectors such as hand tools, electronics and home appliances. He said that it is expected that some US customers may start negotiating directly with Indian suppliers in the future. Sahai also said that the commission given to Chinese companies will be decided through negotiations between buyers and suppliers.
Jalandhar-based OayKay Tools, which manufactures hand tools such as drop forge hammers and cold stamp machines, is in talks with both US-based companies and Chinese companies to supply the US market. “Around four to five companies have approached us. They have a brand name to maintain, so they have to service their customers,” said Siddhant Aggarwal, export officer, OayKay Tools.
India and the US are close to a bilateral trade deal
This increase in export orders is happening at a time when the Indian government is making significant progress in its negotiations with the Trump administration on a trade deal. India hopes that this agreement will help it protect itself from high US tariffs.
Meanwhile, the US and China are at loggerheads over tariffs. Beijing has called these high tariffs “meaningless”. Trump has said that his administration is negotiating with China on trade, while Beijing has denied any talks have taken place and has demanded that the US withdraw all unilateral tariffs.
It is not yet clear how much space the US will give to Indian companies in the market left by Chinese companies, as the US still wants to maintain pressure on China so that it makes some concessions.
When the Canton Fair began earlier this month, the US presence was minimal, but the new tariffs were the focus of almost every conversation. The 90-day reprieve granted by Trump also prompted Chinese companies to increase their investments in Southeast Asia to circumvent US sanctions.
Indian companies have an opportunity to expand their business
Victor Forgings is one of the Indian companies that sees an opportunity to grow its business amid the ongoing confrontation between the US and China. The company has been manufacturing hand tools such as pliers, hacksaws, and hammers since 1954. Ashwani Kumar, managing partner of Jalandhar (Punjab)-based Victor Forgings, said, “We have been approached not only by Chinese suppliers to fulfill orders of American customers, but also by American companies that have plants in China but are now unable to supply due to high tariffs.”
Kumar said the company is planning to expand and set up two more manufacturing facilities to meet the growing demand. He also said that US companies are ready to share their technical know-how with Indian firms so that they can further strengthen their presence in the South Asian market.