Challenges for India in gaining from the US-China Trade War

India has wonderful opportunities to gain from the ongoing trade war between the US and China. But the structural challenges are blocking India from fully capitalising from these opportunities.

Structural Challenges

  • India lags in competitiveness. With the rank of 58, India still ranks below China (28) in the World Economic Forum’s Global Competitiveness Rankings for 2018.
  • In the World Bank’s Logistics Performance Index 2018, it ranks 44, below China (26) and Vietnam (39).
  • India is lagging behind in implementing land and labour reforms. This is hindering large scale investments in export sectors.
  • In the World Bank’s Ease of Doing Business rankings, India ranks 77, compared with China at 46 and Vietnam at 69.
  • India’s slow progress in drafting trade agreements impacts its ability to participate in global value chains, affecting export growth.

In the absence of necessary steps by India to proactively address these concerns, countries like Vietnam and Bangladesh may encash on these opportunities. Given that the global environment is in for even more challenging times reaping every opportunity that presents itself has become more crucial now and India cannot afford to lag behind.

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