Commerce and Industry Minister Suresh Prabhu told a gathering at the Confederation of Indian Industry that countries are going through a new phase of globalisation, where they are "revisiting and re-evaluating" their role.Hinting at the current face-off between the world's two largest economies, the US and China, which is likely to affect global trade growth and hurt India's trade prospects, Prabhu said the first phase of globalisation had faced opposition, the second phase saw countries participating more.
In the third phase, countries are revisiting their role, he said. He added that India was trying to engage with traditional and new partners in this new phase.
US President Donald Trump's decision to impose "reciprocal tax" on countries such as China and India is expected to affect bilateral trade. According to US data, the US runs a trade deficit of $23 billion with India, while with China it is at a whopping $375 billion.
On Friday, the Commerce Ministry had highlighted that higher US tariffs would seriously threaten the global trading system.
Urging to resolve the escalating concerns of China, the ministry had appealed for a dialogue "to avoid damage to overall Chinese-US cooperation".
"The current trade war is a cause for concern for India. The future will depend on the details of the US tariff plans and the products both these countries will be targeting. After slapping a 25% tariff on steel supplies and 10% on aluminium imports from various countries, the US has now drastically cut down on the number of targeted countries," said Ajay Sahai, Director General at FIEO.
According to industry experts quoted by Mint, rising protectionism will raise inflation worldwide. Experts say a survey has found that "average prices for goods and services are rising at one of the strongest rates seen since 2014".
Market flip flop
A report by America-Merrill Lynch stated that "trade war" is the investors' biggest fear, adding that "ominously investors (are) yet to act on fears". The survey shows cash levels falling from 4.7% to 4.6%.
The falling Indian markets, which started beginning February, is an outcome of the worldwide plunge. Indian growth is mostly dependent on domestic factors, but global markets will obviously affect the risk-off sentiment.