Last update:05 December 2024, 12:06 IST

The proposed tariffs could allow the country to expand its role in global supply chains, while Bangladesh’s instability could help India attract investment and diversify its markets.

NITI Aayog CEO BVR Subrahmanyam said Trump’s tariffs would lead to massive trade disruptions but would also position India “as a first-run adversary”. (PTI)

Proposed tariffs on China and other countries by US President-elect Donald Trump could significantly disrupt global trade but will provide India with an opportunity to strengthen its role in supply chains global, according to a senior member of the NITI Aayog.

At the same time, India’s trade relations with Bangladesh are currently strained and uncertain due to changing geopolitical dynamics and rising anti-India sentiment in the neighboring country. Even though India’s trade exposure to Bangladesh is very limited, political instability in the neighboring country threatens its textile industry, which relies heavily on its global partnerships. This also represents a strategic opening for India to strengthen its position in the global textile market.

Advantage India with Trump

Trump’s proposed tariffs on several countries could open up a host of opportunities for India. Although such tariffs, if implemented, will initially disrupt global trade, they could also allow India to expand its role in global supply chains, said Arvind Virmani, member of the NITI Aayog, during a speech organized by the body to launch its Trade Watch Quarterly report. The report was released by Suman K Bery, vice-chairman of NITI Aayog, its CEO BVR Subrahmanyam and senior members.

During his campaign, Trump called India “the largest country imposing tariffs” and also pledged to respond if he was re-elected president. However, his recent statements have focused on imposing tariffs on exports from China, Canada and Mexico. Trump, who is expected to take office on January 20, 2025, also warned of 100% tariffs on BRICS countries’ exports to the United States if they decide to move away from the dollar as their trading currency.

Explaining the situation, CEO BVR Subrahmanyam highlighted the dual nature of the situation. “These tariffs will cause massive trade disruption, but they will also provide India with enormous opportunities. We are now positioned as a first-slip defender. But the question is are we actually ready to catch the ball when it comes to us,” he said.

Bangladesh’s instability hits textile sector

Aayog trade experts say political instability in Bangladesh threatens its thriving textile industry, anchored in global partnerships. “This creates a strategic opportunity for India to strengthen its role in the global textile supply chain by attracting investments and diversifying markets,” said Pravakar Sahoo, senior executive and program director (economics and finance). , to News18 on the sidelines.

In the current situation, India’s trade relations with Bangladesh are at a crossroads as political instability following the overthrow of Sheikh Hasina’s government and other geopolitical uncertainties in Dhaka threaten to disrupt the established economic dynamics .

“Bangladesh, which has built strong partnerships with large multinationals in the labour-intensive textile sector, is now facing challenges that could undermine its position as a manufacturing hub. This crisis provides a strategic opportunity for India to strengthen its own position in the global textile supply chain by attracting investments and diversifying its export markets,” Sahoo added.

Importantly, Bangladesh’s textile industry, considered the cornerstone of its economy, has long relied on partnerships with global brands to boost its exports and economic growth. However, the current unrest – with an interim government in place and an atmosphere of looming conflict – creates an unfavorable environment for trade and investment. This uncertainty has raised serious concerns among some of the key international partners about Bangladesh’s reliability as a production base, a senior Aayog official said.

“As Bangladesh faces its political and other challenges, India is well placed to take advantage of these changing dynamics. With its large workforce and competitive production costs, India can truly absorb demand from brands looking for secure and scalable manufacturing options. This could turn into an opportunity for manufacturing and manufacturing policy in India,” the senior member added.