India may become dumping ground for Chinese EVs amid western tariff hikes: GTRI

The United States and the European Union have significantly raised tariffs on Chinese EVs and batteries, with the US imposing nearly 100 per cent duti

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As Western nations intensify their trade war with China, India could find itself inundated with Chinese electric vehicles (EVs) and batteries. The Global Trade Research Initiative (GTRI) warned that recent tariff hikes by the United States and European Union on Chinese imports could lead to a surge of Chinese goods in the Indian market.

The United States and the European Union have significantly increased tariffs on Chinese EVs and batteries, with the US imposing nearly 100 per cent duties on these items. GTRI's brief emphasised that these measures could result in China redirecting its exports to other markets, including India, to circumvent the Western tariffs.

"Both the USA and the European Union (EU) are cutting imports of Electric Vehicles from China. The raising of tariffs on EVs, batteries, and many other new technology items by the US may push China to dump these products in other markets including India," the GTRI statement read.

On May 14, the US government announced a steep increase in tariffs on a range of Chinese imports, including EV batteries, computer chips, and medical products, escalating the trade conflict with Beijing. The White House cited "unacceptable risks" to domestic economic security from China's trade practices, which it claims involve flooding global markets with cheap goods.

GTRI noted that these tariff hikes exceed the US's bound duty commitments at the World Trade Organization (WTO), potentially breaching WTO rules. The American government has defended the increases under the rarely invoked National Security clause.

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The outlook for this is less optimistic for products like EVs and semiconductors, where India remains a net importer. GTRI stressed the need for India to remain vigilant to prevent the dumping of Chinese goods, which could disrupt its domestic market.

In a bid to attract investment in the EV sector, the Indian government recently introduced a policy slashing import taxes on certain models from 100 per cent to 15 per cent, provided manufacturers invest at least $500 million and establish local factories.

"The US and European Union (EU) are taking active measures to cut reliance on China. With stagnant exports and rising imports from China, India may also need a China strategy," GTRI concluded.

First Published Date: 16 May 2024, 18:00 PM IST