India should avoid getting into trade war, advices ASSOCHAM, an apex chamber of Indian commerce and industry

New Delhi: Indian economy is dependent on imports. Thus, India cannot afford to get into a trade war with its trade partners. Therefore, ASSOCHAM, the apex trade association of India has advised that India should take the negotiations route to resolve the bilateral trade issues.

President Donald Trump threatened a trade war against Europe in the last month. He also announced tax on imports of steel and aluminium. There were severe reactions from all around the world on this issue. A few days earlier to this announcement, the US President had criticised the taxes on the US goods in India and China. Experts have warned that the secured trade policies adopted by the developed countries including the US have created a new crisis in the world and this will have serious effects on international trade. This can soon ignite a trade war, are the claims being made.

In view of this, the main organisation of the Indian entrepreneurs ‘The Associated Chambers of Commerce and Industry of India’ has advised the government not to enter into the trade war. India doesn’t have a scope in case the trade war sparks off as India is mainly importing a large number of items. ASSOCHAM has pointed out that many of these imported Items are of essential nature.

India has an annual trade deficit of $150 billion. Total Indian imports are to the tune of $450 billion against the Indian exports of about $300 billion. But crude oil and related items amount to one fourth of these imports. Similarly, India imports plastics and fertilizers as India lacks domestic capacity at the moment. ASSOCHAM underlined that if these imports are stopped, the country does not have the capacity to meet the demand.

It will be difficult for India to defend itself in a trade war situation. Instead India should try and reduce the imports of those products, which it is capable to increase the production of, ASSOCHAM has said. There has been an increase in the steel imports in the last year. The government needs to look into this as India has the capacity to produce steel. Therefore, imports of steel can be reduced by increasing the domestic production. Same thing can be applied to coal and other items, suggested ASSOCHAM.