US-China Trade Tensions: Recently, the slowdown in the ongoing tariff war between America and China has definitely given some relief to the global economy, but its impact is being seen negatively on India’s electronics sector. The reduction in trade tensions between the two countries after the meeting of the US and Chinese Presidents in Busan was described as a ‘success’, but this development has raised concerns for India’s electronics industry.
Impact of US-China agreement
After the reduction in the tariff (import duty) imposed by America on goods imported from China, Indian electronics companies have expressed the fear of lagging behind in competition. The industry says that this may weaken their hold in the American market, because now Chinese products will reach there at a cheaper rate. For this reason, Indian industry has appealed to the government to take supportive policy steps to reduce this potential impact.
After the meeting between US President Vladimir Putin and Chinese President Xi Jinping on October 30, the US reduced the fentanyl tariff imposed on China from 20 percent to 10 percent. According to the report of Economic Times, due to this step the competitive advantage that India was getting till now has reduced significantly.
ICEA’s concern
India Cellular and Electronics Association (ICEA) said in a letter to the government on November 6 that the cut in US tariffs on Chinese goods could lead to a decline of about 10 percent in the profits of Indian electronics companies. ICEA represents the country’s major electronics companies — Apple, Google, Motorola, Foxconn, Vivo, Oppo, Lava, Dixon, Flex and Tata Electronics.
This situation is also important because the electronics sector has been prominent among the sectors of India which have made the fastest progress under the ‘Make in India’ initiative. This new challenge arising from the trade agreement between America and China could threaten to slow down India’s success.
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