US-China Tariff War: India Fears Becoming China’s Dumping Ground

(By Devansh Desai)

New Delhi: The ongoing tariff war between the United States and China is sparking global concerns, with experts warning that India could emerge as an unintended casualty. As the U.S. tightens trade restrictions on Chinese goods, analysts believe China may increasingly turn to India as an alternative market, raising fears of large-scale dumping.

According to Ajay Srivastava, Director of the Global Trade Research Initiative (GTRI), India must take the situation seriously. Without rapid investment in industrial capacity and reforms in domestic manufacturing, Srivastava warns, India could become a “dumping ground” for cheap Chinese goods, further worsening its trade deficit.

India’s Trade Deficit with China Soars to $99 Billion

In the fiscal year 2025, bilateral trade between India and China reached $127.7 billion, with India exporting only $14.2 billion worth of goods while importing $113.4 billion. A significant surge in imports of electronics, solar panels, and batteries is seen as a key reason for this growing trade imbalance.

What is Dumping and Why is India at Risk?

“Dumping” refers to the practice of exporting goods at prices lower than their production costs to gain market share. With the U.S. market becoming increasingly inaccessible due to steep tariffs, there is growing concern that Chinese manufacturers will offload their excess inventory in price-sensitive markets like India.

Experts point out that China previously had access to a $500 billion U.S. market. With that access now restricted, it is logical for Chinese exporters to seek out new markets—and India could be a prime target.

India’s Watchdog on Alert, But No New Tariffs Yet

India’s Directorate General of Trade Remedies (DGTR) is responsible for monitoring and acting against unfair trade practices like dumping. While no new anti-dumping duties have been imposed on Chinese goods yet, the DGTR is investigating certain chemical imports from China and other countries.

Recently, the Indian government also issued a warning to a domestic company not to assist China in bypassing U.S. tariffs—a sign that New Delhi is closely watching developments.

Could India Become a Transit Hub for Chinese Goods?

Some analysts also believe that China may send semi-finished goods to India or countries like Vietnam, complete them there, and then reroute them to the U.S. Ajay Srivastava notes that India’s manufacturing costs are around 20% higher than China’s, but even then, products completed in India might be cheaper than Chinese goods with added U.S. tariffs.

This could temporarily benefit Indian ports and logistics companies, but it comes with a diplomatic risk. If India becomes a de facto transit hub for Chinese exports to the U.S., Washington may not look kindly on it.

Industry Concern Grows, Government Monitoring the Situation

Ajay Sahai, Director General of the Federation of Indian Export Organizations (FIEO), acknowledged that there is growing concern in Indian industry over potential dumping by Chinese firms. “When a market as large as the U.S. becomes inaccessible to China, it will naturally look for alternatives. India must be cautious,” he said.

Sahai also confirmed that the Indian government is actively monitoring low-cost imports and is prepared to act if needed.