A new report from the Global Trade Research Initiative (GTRI) reveals that the US crackdown, imposing a 125 per cent import tariff on Chinese goods, presents a unique, albeit short-term, opportunity for India's small-scale manufacturers. The GTRI suggests that this shift in global trade dynamics could pave the way for Indian producers to increase their exports to the US, capitalising on the trade gap left by China.
The GTRI noted that the US imported over USD 148 billion worth of products in 2024, with China accounting for a significant share of USD 105.9 billion, nearly 72 per cent of the total. In comparison, India's share in this sector was a modest USD 4.3 billion, or just 2.9 per cent.
"A steep 125 per cent U.S. import tariff on Chinese goods has opened a rare, short-term export window for India's small manufacturers," said the GTRI in its latest observation. The report highlights that the tariffs have created a significant gap in the US market, which Indian manufacturers could potentially fill.
"Indian producers already make many of these goods—from locks to lamps to plasticware—but mostly at a small scale. With the right government push on export incentives, product certifications, and financing, these firms could expand quickly and tap into this USD 100 billion opening," the GTRI added, stressing that the opportunity is short-lived.
The GTRI outlined several product categories where small-scale Indian manufacturers could meet the demand, including fireworks, plastic tableware and kitchenware, locks, hand tools like pliers and spanners, electric appliances, hair dryers, and electric space heaters.
The US imports USD 581 million worth of fireworks annually, with China contributing 96.7 per cent. India's exports in this sector, however, stand at a mere USD 0.24 million, highlighting the vast potential for Indian manufacturers.
Similarly, the US imports USD 4.97 billion worth of plastic tableware and kitchenware, with China supplying 80 per cent of the total. India's share in this market is just 0.49 per cent, amounting to USD 171.65 million. The GTRI suggests that plastic producers in Gujarat and Dadra & Nagar Haveli could capitalise on this shift if they receive the right incentives.
Locks also represent a promising product category. The US imports USD 1.196 billion worth of locks each year, with China contributing 66.3 per cent. India's contribution stands at just USD 30.7 million, or 2.57 per cent. Hand tools like pliers and spanners, representing a USD 1.138 billion market in the US, could also benefit Indian manufacturers, given that India already holds a 17.7 per cent share in this market.
In conclusion, the GTRI report urges India's small-scale industrial sector to scale up its operations and improve its capabilities to take full advantage of this fleeting opportunity. The GTRI recommends boosting incentives such as the Remission of Duties and Taxes on Exported Products (RoDTEP) and duty drawback rates, as well as offering strategic support for MSMEs to modernise and meet US quality and compliance standards.
It also suggested the launch of an online facilitation cell to help Micro, Small, and Medium Enterprises (MSMEs) navigate regulatory procedures and certifications needed to access the US market.
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