China Dumping Threat to India Amid US Trade War: FIEO

New Delhi, May 16 (PTI) China has overcapacity in many sectors such as electric vehicles and hence threat of dumping of goods cannot be ruled out in the domestic market due to the escalating trade war between Beijing and Washington, exporters' body FIEO said on Thursday.

Federation of Indian Export Organisations (FIEO) President Ashwini Kumar said industry and the government should keep a close watch on the imports from China and if surge or dumping happens, the Directorate General of Trade Remedies (DGTR) should take appropriate action to safeguard businesses.

"China is sitting on overcapacity in many sectors and thus the threat of dumping, in any case, not ruled out and more so when an important market is closed for their exports," Kumar told reporters here.

The US on Tuesday announced plans to slap new tariffs on Chinese electric vehicles, advanced batteries, solar cells, steel, aluminum and medical equipment -- an election year move that is likely to increase friction between the world's two largest economies.

According to a report by think tank GTRI, the escalation of the trade war between the US and China may push Beijing to dump goods in the Indian markets.

However, Kumar added that this also provides opportunity to India and other competitors to chip in at the supply gap.

Of the products affected by additional duties on China, India has opportunities in facemasks, PPE, syringes, needles, medical gloves, aluminium and iron and steel.

"Opportunity may come in China also with retaliation on US exports, provided we have market access in products targeted by China," he said.

Further, he said that the Red Sea crisis is having a significant negative impact on both sea freight and air freight, which is in turn affecting Indian exports.

As some goods traditionally shipped by sea are being diverted to air due to the crisis, there is a rise in air freight demand. This has pushed air cargo costs upwards, with some reports suggesting a jump of over 300 per cent for routes like India to Europe, Kumar said.

"The rise in both sea and air freight costs makes Indian exports more expensive for foreign buyers. This can hurt India's competitiveness in the global market. We have lost few orders due to high freight rates, particularly in metal and commodities," he added.

He also said that delays and higher costs can disrupt the smooth flow of Indian exports, leading to potential order cancellations and reputational damage.

"Overall, the Red Sea crisis is creating a challenging situation for Indian exporters. The Indian government and businesses are looking for strategies to mitigate these impacts, such as exploring alternative shipping routes and negotiating with shipping lines," he said.

The DGTR (Directorate General of Trade Remedies) is an investigation arm of the commerce ministry that deals with anti-dumping duty, safeguard duty, and countervailing duty. These duties are trade remedy measures, provided under an agreement of the World Trade Organisation (WTO) to its member countries.