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US-China trade war: Indian SMEs & their business alignment,
by Deepak Hegde, October 24, 2018


The United States is imposing about 10% tariff on an additional $200B worth of Chinese goods - which accounts for roughly half of the products that China sells to the United States. China has previously threatened to retaliate with tariffs on an additional $60 billion of US goods

While China, France, and India were among the many nations defending globalization at the World Economic Forum, clearly, protectionist sentiment is gaining momentum.


Added to this, the rupee depreciation of over 13% for the year 2018, isn't pretty either! If you recently shopped for foreign branded products, apparels or otherwise and compared against the Indian made ones, the rupee impact is obvious. With perceived increase in Indian brand and improved access, Indian consumers may increasingly turn inwards.


Where does it leave the Indian SMEs? How do they align themselves? Embrace globalization, protectionism or a mix of both?

As per Export Promotion Council for Handicrafts (EPCH), India will benefit from this ongoing trade war, especially because the US government focus is not on China and India has the needed design and variety to offer.

Confederation of Indian Industry (CII) too highlighted that India should focus on the US market for items in the areas of machinery, electrical equipment, vehicles and transport parts, chemicals, plastics and rubber products 

SMEs should definitely take advantage of the trade war and look for exports while continuing to bet on the large Indian consumers base and local B2B alternatives. With smartphone users expected to reach about 500M by 2021, B2B SMEs are recognizing the need to go mobile, to acquire and serve customers. Indian consumers, especially millennials and generation Y, who like to experiment and personalize their products are expecting the services to be available digitally too. All these factors would certainly present more opportunities to sell in India and SMEs embracing sophisticated technologies would probably create new winners in the digital, algorithm driven, mobile-first economy.


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