The pace at 64-year-old Thirunavkarsu's spinning mill in southern India's Tamil Nadu state has noticeably slowed down. The viscose yarn – a popular material that goes into making woven garments – he produces, now sits in storage, as orders from local factories have dropped nearly 40% in the last month. That's because Chinese import of the material has become cheaper by 15 rupees ($0.18; £0.13) per kilo and has flooded Indian ports. With Donald Trump imposing tariffs of up to 145% on Chinese goods going into the US, manufacturers in China have begun looking for alternative markets. India's textiles makers say they are bearing the brunt of the trade tensions as Chinese producers are dumping yarn in key production hubs. While China is the leading producer of viscose yarn, India makes mostof the viscose yarn the country needs locally with imports only bridging supply gaps. Mill owners like Thirunavkarsu fear their yarn won't survive the onslaught of such competition. "We can't match these rates. Our raw material is not as cheap," he says. Jagadesh Chandran, of the South India Spinners Association, told the BBC nearly 50 small spinning mills in the textile hubs of Pallipalayam, Karur and Tirupur in southern India are "slowing production". Many say they'll be forced to scale down further if the issue isn't addressed. China's Ambassador to India, Xu Feihong has sent assurances to India that his country will not dump products and in fact wants to buy more high-quality Indian products for Chinese consumers. "We will not engage in market dumping or cut-throat competition, nor will we disrupt other countries' industries and economic development," he wrote in an opinion piece for the Indian Express newspaper. But anxieties about dumping are spread across sectors in India, as China - Asia's biggest economy - is the world's largest exporter of practically all industrial goods, from textiles and metals, to chemicals and rare minerals. While pharmaceuticals - and later phones, laptops, and semiconductor chips - were exempted from steep tariffs, large chunks of Chinese exports still run into Trump's 145% tariff wall. It is these goods that are expected to chase other markets like India. Their sudden inflow will prove "very disruptive" to emerging economies in Asia, according to Japanese broking house Nomura, whose research earlier revealed that China was flooding global markets with cheap goods even before Donald Trump took office earlier this year. In 2024, investigations against unfair Chinese imports rose to a record high. Data from the World Trade Organisation (WTO) shows, nearly 200 complaints were filed against China at the forum - a record - including 37 from India. India in particular, with heavy dependencies on Chinese raw materials and intermediate goods, could be hit hard. Its trade deficit with China - the difference between what it imports and exports - has already ballooned to $100bn (£75bn). And imports in March jumped 25%, driven by electronics, batteries and solar cells. In response, India's trade ministry has set up a committee to track the influx of cheap Chinese goods, with its quasi-judicial arm probing imports across sectors, including viscose yarn. India also recently imposed a 12% tax on some steel imports, locally known as a safeguard duty, to help halt an increase in cheap shipments primarily from China, which were pushing some Indian mills to scale down. Despite such protections-and a loud marketing campaign by Prime Minister Narendra Modi's government to boost manufacturing locally - India has found it hard to reduce its reliance on China, with imports rising even whenborder tensions between the two neighbours peaked after 2020. That's because the government has only had "limited success" with its plans to turn India into the world's factory through things like the production linked subsidies, says Biswajit Dhar, a Delhi-based trade expert. And India continues to depend heavily on China for the intermediate goods that go into manufacturing finished products. While western multi-nationalcompanies like Apple are increasingly looking towards Indiato diversify their assembly lines away from China, India is still dependent on Chinese components to make these phones. As a result, imports in sectors like electronics have risen significantly, pushing up its trade deficit. India's burgeoning deficit is a "worrying story", says Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI) think tank, all the more so because its exports to China have dropped to below 2014 levels despite a weaker currency, which should ideally help exporters. "This isn't just a trade imbalance. It's a structural warning. Our industrial growth, including through PLI (production linked incentive) schemes, is fuelling imports, not building domestic depth," Srivastava wrote in a social media post.In other words, the subsidies are not helping India export more. "We can't bridge this deficit without bridging our competitiveness gap." India needs to get its act together quickly to do that, given the opportunity US trade tensions with China have presented. But also because countries with a large rise in imports from China generally tend to see the sharpest slowdown in manufacturing growth, according to Nomura. Akash Prakash of Amansa Capital agrees. A key reason why Indian private companies were not investing enough, was because they feared being "swamped by China", he wrote in a column in the Business Standard newspaper. A recent study by the ratings agency Icra also corroborates this view. With fears of Chinese dumping becoming more widespread and the likes of the European Union seeking firm guarantees from Beijing that its markets will not be flooded, pressure is mounting on China - which is now urgently looking to secure newer trading partners outside the US. China wants to completely shift the narrative, says Mr Dhar, "It is trying to come clean amidst increased scrutiny". Despite the reassurances from Beijing, Delhi should usethawing relationswith its larger neighbour to kickstart a proper dialogue on its firm stance about dumping, says Mr Dhar. "This is an issue that India must flag, like most of the Western countries have." Follow BBC News India onInstagram,YouTube,TwitterandFacebook.
India worried about Chinese 'dumping' as trade tensions with Trump escalate
TruthLens AI Suggested Headline:
"India Faces Textile Industry Challenges Amidst Rising Chinese Imports and Trade Tensions"
Bbc News
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TruthLens AI Summary
The textile industry in southern India, particularly in Tamil Nadu, is facing significant challenges due to a steep decline in orders, attributed to a surge in cheaper viscose yarn imports from China. Thirunavkarsu, a mill owner, has reported a nearly 40% drop in orders, as Chinese producers lower their prices, making it difficult for local manufacturers to compete. With the backdrop of heightened trade tensions between the U.S. and China, following Donald Trump's imposition of tariffs reaching up to 145% on Chinese goods, Chinese manufacturers are actively seeking alternative markets for their products. This influx of cheaper Chinese yarn threatens the viability of many small spinning mills in India, prompting fears of further production cuts and financial strain on local businesses. Jagadesh Chandran from the South India Spinners Association noted that many mills are already slowing production, and without intervention, they may be forced to downsize operations even further.
Despite assurances from Chinese officials that they will not engage in market dumping, concerns about the negative impact of Chinese imports extend beyond textiles, affecting various sectors in India. The World Trade Organization has recorded a significant number of complaints against China for unfair trade practices, with India filing 37 of these in the past year alone. India's trade deficit with China has reached $100 billion, exacerbated by a 25% increase in imports driven by electronics and other goods. In response, the Indian government has instituted measures such as a 12% safeguard duty on steel imports and established a committee to monitor cheap Chinese goods. However, experts warn that India's reliance on Chinese raw materials remains high, complicating efforts to boost domestic manufacturing through initiatives like production-linked incentives. As the Indian economy grapples with these trade dynamics, experts emphasize the need for a strategic dialogue with China to address the issue of dumping and foster a more balanced trade relationship.
TruthLens AI Analysis
The article sheds light on the growing concerns in India regarding cheap imports of viscose yarn from China, which are significantly impacting local textile manufacturers. The context of escalating trade tensions between the United States and China, particularly under Donald Trump's administration, sets the stage for this issue. As Chinese manufacturers seek alternative markets following high tariffs on their goods entering the US, Indian textile producers find themselves facing fierce competition.
Economic Impact on Local Producers
The slowing production at Thirunavkarsu's spinning mill is indicative of a broader trend affecting numerous textile manufacturers across southern India. The drop in orders by nearly 40% can be attributed to the influx of cheaper Chinese yarn, which undermines local production capabilities. This situation raises alarms about the sustainability of local industries, as mill owners express fears of being unable to compete with the lowered prices from China. The mention of nearly 50 small mills reducing production highlights the urgency of the matter.
Diplomatic Reassurances from China
Chinese Ambassador Xu Feihong's assurances to India regarding market practices present a contrasting narrative. His commitment to avoid dumping and to foster trade in high-quality Indian products aims to alleviate Indian concerns. However, skepticism remains among Indian producers who fear that these diplomatic overtures may not translate into concrete actions to protect their interests.
Wider Implications for Trade and Industry
The anxieties about dumping are not limited to textiles; they extend across various sectors in India, reflecting a broader concern over the impact of Chinese exports on local industries. As China remains a dominant force in global manufacturing, its actions can significantly influence the economic landscape in India and beyond.
Potential Manipulation and Public Perception
While the article presents factual information, it might subtly manipulate public perception by focusing on the negative consequences of Chinese imports without equally emphasizing the potential benefits of competitive pricing and increased consumer choice. The language used could evoke a sense of urgency and fear among local producers, which might not fully encapsulate the complexities of international trade dynamics.
Market Reactions
Given the potential impacts on local industries, this news could influence stock market reactions, especially for companies involved in textiles and manufacturing. Investors may respond to the perceived threats from Chinese imports by reassessing the viability of Indian textile firms, potentially leading to fluctuations in stock prices.
Geopolitical Context
The situation reflects the broader geopolitical tensions between China, India, and the US. As trade dynamics shift, countries may reevaluate their economic strategies and alliances, which could alter the balance of power in global trade.
In conclusion, the article presents a significant issue facing Indian textile manufacturers, highlighting the intricate interplay between trade policies, local industries, and international relations. The reliability of the information is bolstered by the inclusion of specific examples and quotes, although the potential for manipulation exists in the framing of the narrative.