Time To Push Back, Pg6

Key Highlights:

• A recent White House report, titled "The Great Transhipment Scam: Global Evasion and Economic Costs", has accused India of being among the top 'enablers' of China's evasion of U.S. tariffs.
• The report alleges that India and over 40 other countries import Chinese goods, make minor modifications, and then export them to the U.S. at lower tariffs.
• India's imports from China are shifting from finished products to intermediate goods, indicating a move towards more in-house assembly and manufacturing.
• The U.S. has not yet announced punitive actions, but the possibility remains, potentially impacting India's economy.
• India has previously made concessions to U.S. pressure on trade issues, including tariffs on motorcycles and shrimp feed, and diversification of oil imports.

Detailed Insights:

• The accusation stems from U.S. tariffs imposed on Chinese goods in 2018 under Section 301 of the Trade Act of 1974, which led Chinese exporters to route goods through third countries.
• The White House report categorizes India in Tier 1 of countries with "elevated illegal transshipment risk," alongside Mexico, Canada, and the European Union.
• The U.S. estimates that approximately $67 billion in U.S.-bound goods were transshipped from China through hubs like Mexico, India, and Vietnam in 2025, resulting in an estimated $28 billion in lost tariff revenue.
• The increasing share of intermediate goods in India's imports from China supports the Make in India initiative by facilitating domestic assembly and manufacturing.
• Past instances of India reducing tariffs on high-end motorcycles and shrimp feed, and diversifying oil imports from Russia, highlight the significant pressure the U.S. can exert.
• The article suggests India needs to resist bowing to U.S. pressure, especially given the importance of Chinese imports for the Make in India strategy.

Key Concepts Involved:

• Tariff Evasion: The practice of illegally avoiding or reducing the payment of customs duties on imported goods.
• Intermediate Goods: Products used as inputs in the production of other goods and services, rather than being sold directly to end consumers.
• Make in India: A government initiative launched in 2014 to encourage companies to manufacture their products in India and incentivize investment into the country.
• Foreign Direct Investment (FDI): An investment made by a firm or individual in one country into business interests located in another country.