The new US President, Donald Trump, plans to set up trade restrictions that could change the way China sells its products, especially to other countries in Asia, including India. A report by Crisil says that this could make it harder for Indian businesses to sell their products both in Asia and around the world.
Because Trump might raise tariffs (taxes on imports) on Chinese goods, China may try harder to sell its products to Asian countries. This could lead to more competition for Indian exporters, possibly slowing down India’s export growth.
The report also mentions that India’s economic situation is facing some challenges. While exports were doing well in the first part of the year, they fell sharply in the second. In fact, in December 2024, India’s exports dropped by 1% compared to last year, mainly because of large falls in exports of gems and jewelry (down 26.5%) and oil (down 28.6%). Although there was a small growth in core exports like garments and coffee, it wasn’t enough to offset the overall decline.
Importantly, India’s trade deficit (when the country buys more than it sells) is getting bigger, which is a worry. However, strong service exports and high remittance inflows (money sent back home by Indians working abroad) are helping keep things stable.
Crisil believes the future of trade in the coming months will depend on how China shifts its sales and how India tackles the challenges that come with it.
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