Article 2: Time to push back
Why in news: The US has accused India of enabling Chinese tariff evasion, raising concerns over potential punitive measures, India-US trade relations, manufacturing, supply-chain dependence and strategic autonomy.
Key Details
- US allegation: India allegedly helps China circumvent US tariffs through processing and re-exporting.
- Manufacturing shift: India increasingly imports intermediate goods rather than finished Chinese products.
- Trade pressure: Potential US penalties could affect Indian exports and manufacturing.
- Strategic autonomy: India faces pressure to balance US relations with economic interests.
- Way forward: Strengthen domestic manufacturing while diversifying supply chains and resisting unilateral external pressure.
US Accusation Against India
- The US White House has accused India of helping China evade American tariffs.
- India is among around 40 countries identified as potential enablers of Chinese tariff circumvention.
- The allegation is that Chinese goods are imported, minimally modified and re-exported to the US at lower tariffs.
- Such action could create economic and trade risks for India.
- The US has not yet announced punitive measures, but further action remains possible.
Changing Nature of Chinese Imports
- Chinese imports remain an important part of Indian manufacturing.
- India is gradually moving away from simply importing finished Chinese products and making cosmetic changes.
- The share of intermediate goods and components in imports from China is increasing.
- Indian manufacturers are increasingly undertaking assembly and value addition domestically.
- This transition can support India’s goal of becoming a global manufacturing hub.
Risk of US Trade Pressure
- India has previously responded to US trade pressure by reducing tariffs on several products.
- Tariffs on high-end motorcycles were reduced from 60–75% to 50% in 2018 and later to 40% in 2025.
- Import duties on products such as shrimp-feed components, frozen duck and turkey were also reduced.
- Such concessions may encourage the US to make additional demands.
- Excessive concessions could undermine India’s policy autonomy and negotiating position.
Pressure on Energy and Economic Policy
- US punitive tariffs also influenced India’s decision to reduce dependence on Russian oil.
- Russia’s share in India’s oil imports fell below 20% in January 2026, after earlier being substantially higher.
- India had similarly reduced imports of Venezuelan oil following Western pressure.
- However, changing geopolitical circumstances later encouraged India to resume greater purchases of Russian oil.
- This highlights the tension between energy security, economic interests and external pressure.
Need for Strategic Autonomy
- India should avoid automatically yielding to external pressure when its domestic manufacturing interests are involved.
- Chinese intermediate imports currently support several Make in India supply chains.
- India needs to distinguish between genuine tariff circumvention and legitimate manufacturing activity.
- Diversifying supply chains should continue without weakening India’s industrial competitiveness.
- A balanced approach should protect national interest, trade relations, manufacturing growth and strategic autonomy.
Conclusion
India must address genuine concerns over tariff circumvention without allowing external pressure to undermine its manufacturing ambitions. Chinese intermediate goods currently support several Indian industries and the Make in India initiative. Therefore, India should diversify supply chains, increase domestic value addition, negotiate firmly with the US and preserve strategic autonomy, while maintaining a rules-based and mutually beneficial trade relationship.