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Why US crackdown on transshipment could have consequences for India

Why US crackdown on transshipment could have consequences for India

Indian Express17-07-2025
A key element in the flurry of reciprocal tariff letters the United States has sent to countries deeply integrated with its economy, be it Canada and South Korea — or those with close economic ties to China, such as Thailand and Malaysia in the Association of Southeast Asian Nations (ASEAN) region — is the threat of steeper tariffs on transhipped goods. Washington DC views this as a backdoor route for Chinese products to enter its market.
Transhipment in trade parlance refers to the practice of importing products from one country and exporting them to another, usually without significant processing or value addition. Indian experts suggest that, in India's case, the US could invoke stringent 'rules of origin' provisions under the trade agreement to discourage the entry of Chinese goods into the US via India. But India's reliance on Chinese products across industry could pose a significant problem while dealing with the US.
The Trump administration's crackdown on rerouted goods, which previously allowed countries like Vietnam to serve as conduits for Chinese exports into the US, could extend to India as US Vice President JD Vance during his visit to India in April, issued a veiled warning to New Delhi, stating that the US seeks partners committed to working with America to build things —'not those who merely allow themselves to become conduits for transhipping goods from elsewhere'. This assumes significance for India as its dependence on China has increased sharply, particularly since the Covid-19 pandemic. To be sure, Chinese exports have surged globally — including to the US — following the pandemic, as production in China remained relatively stable while the rest of the world faced disruption.
Official trade data indicates a simultaneous rise in imports from China and exports to America. Data from the Commerce and Industry Ministry showed that India's exports to the US in April rose 27.31 per cent to $8.41 billion, up from $6.61 billion in April last year. At the same time, imports from China increased by a comparable margin — up 27.03 per cent to $9.90 billion, compared to $7.79 billion a year earlier.
A similar pattern emerged in March, as concerns grew over the possibility of steeper Trump-era tariffs on Chinese goods relative to Indian ones. India's exports to the US jumped 35 per cent to $10.14 billion, while imports from China rose 25.02 per cent to $9.67 billion. During FY25 as a whole, India's exports to the US rose 11.59 per cent to $86.51 billion, while imports from China increased 11.52 per cent to over $113 billion.
However, in June the imports from China surged 2.48 per cent but exports to the US jumped 23.53 per cent. This comes amid an increased number of anti-dumping duties that India has begun imposing on high value items such as steel and other industrial goods from China.
Decoupling from China has been a slow and painful process even for the US. For India — which aims to expand its manufacturing base to create jobs for its large population — the challenge is even greater. Despite opting out of the China-led Regional Comprehensive Economic Partnership, India's imports from China have continued to surge, surpassing $113 billion in FY25.
While poor logistics and a lack of industrial expertise are often cited as reasons why India's manufacturing sector has struggled, the imbalance in the Chinese economy also played a role. The lower cost of Chinese goods has disrupted several Indian industries. In the renewable energy sector, where domestic solar cell manufacturers have struggled to compete with Chinese imports.
Chen Gang, Assistant Director and Senior Research Fellow at the National University of Singapore, notes in his report China's Consumption Dilemma in the Age of Trump that 'China's economy has been notoriously imbalanced, characterised by low domestic consumption and an overreliance on export and investment.'
China's 'state capitalism has an innate tendency to focus on the 'supply side' instead of the 'demand side',' Gang wrote in his report for the Hinrich Foundation. He adds that this approach has led to 'enormous industrial capacity subsidised by the state but detached from real market demand.' Policies such as 'dual circulation', aimed at promoting self-sufficiency, have inadvertently 'exacerbated industrial overcapacity rather than alleviated it'. That surplus capacity, in turn, has driven Chinese producers to aggressively seek external markets—potentially distorting global trade and fuelling competitive pressures abroad.
'Since the end of its draconian pandemic restrictions, China's economy has struggled to rebound amid weak demand, excess savings, debt crises, and falling property prices and investment,' the report said. 'Economists are urging Beijing to shift focus to boosting consumer demand and away from a debt-fuelled, investment-led model that funnels resources into export-oriented manufacturing at the expense of households.'
Ravi Dutta Mishra is a Principal Correspondent with The Indian Express, covering policy issues related to trade, commerce, and banking. He has over five years of experience and has previously worked with Mint, CNBC-TV18, and other news outlets. ... Read More
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In Bihar, a matter of life and debt
In Bihar, a matter of life and debt

The Hindu

time17 minutes ago

  • The Hindu

In Bihar, a matter of life and debt

Chandra Devi, 53, holds up a loan slip, its creases more prominent than its text. It states that she borrowed a loan of ₹35,000, allegedly from RBL Bank, a private sector institution, in May 2024. 'I have to repay the loan and an interest rate of do taka (2%),' Chandra declares. But the slip states that the interest rate is a hefty 25% over two years. Chandra is sitting in a mango orchard with a group of women at Dekuli Chatti village in Darbhanga district of Bihar. Around her, children climb trees under an overcast sky. Some of them clamber to the top, others hang upside down from branches. Their mothers sit on a yellow plastic sheet spread over the grass. While watching their children's antics, they share their struggles on repaying dues. According to the 2022 caste survey of Bihar, 34% of households in the State earn ₹6,000 or less per month. In June 2025, Piramal Enterprises, an Indian non-banking financial company (NBFC) focused on financial services, published a study. In it, they stated that the share of Indian households from economically weaker sections of society — that is, those earning ₹1-2 lakh a year — who borrowed from formal channels, such as banks and NBFCs, contracted by 4.2% between 2018-19 and 2022-23. At the same time, the share of households borrowing from informal or non-institutional sources of credit, such as money lenders, friends, families, and shopkeepers, grew by 5.8%. The data also shows that Bihar accounts for the highest share (18%) of households in India who borrow from non-institutional lenders. The study was based on data from the Centre for Monitoring Indian Economy, an independent private entity that serves as an economic think tank as well as a socioeconomic database. However, many households that borrow from non-institutional lenders also borrow from microfinance institutions, which are regulated by the Reserve Bank of India (RBI), the country's central bank. The RBI defines a microfinance loan as 'a collateral-free loan given to a household having an annual income up to ₹3,00,000'. According to Sa-Dhan, an RBI-approved self-regulatory body for the microfinance sector, there are 224 such institutions in India. While loans from microfinance institutions help impoverished borrowers across India, borrowers are often unable to repay them and fall behind. They also sometimes run away, fearing that microfinance companies will demand repayment using strong-arm tactics. As a result, many households remain trapped in a cycle of debt. When loans become nightmares Chandra belongs to the Musahar community. Musahars are among the 18 Scheduled Castes in Bihar who were recognised as Mahadalits by Chief Minister Nitish Kumar in 2007. They are socially and economically the most backward among Scheduled Castes. Chandra says she doesn't know the name of the bank from which she borrowed a loan; instead, she identifies it by its location — Donar, a locality in Darbhanga. 'I was asked to give my Aadhaar card, nothing else,' she says, about the process of securing the loan. The slip she holds says the loan was taken for 'agriculture-livestock/diary/poultry/cattle' purposes, but Chandra, the mother of two daughters and a son, says she borrowed it for her older daughter's wedding. Before the wedding, the groom's family demanded a motorcycle as part of dowry. Chandra borrowed money from the village mahajan (money lender). When that didn't suffice, she went to a women's self help group (SHG). Finally, she secured a loan, allegedly from RBL Bank. As Chandra's husband has been out of work for several months due to an illness, her family depends entirely on the amount her son sends home. 'He sells apples in Kolkata, so he cannot always send money.' she says. 'After all, everything is so expensive these days.' Chandra also worries that she has a teenage daughter who will 'soon be of marriageable age.' Punam Devi, 42, who is also from the Musahar community, keeps two documents close to her chest. One shows that she took a loan of ₹40,000, allegedly from Pyramid Finserve, an emerging NBFC, in July 2024. Punam borrowed the loan for her younger son, who had been diagnosed with meningitis. The other document shows that she borrowed another loan of ₹75,000, allegedly from Utkarsh Small Finance Bank Limited, a commercial bank focused on 'providing banking and financial services, particularly to underserved and unserved sections of the population, primarily in rural and semi-urban areas.' This loan, borrowed to pay for treatment of her husband who lost a leg in an accident, was cleared on March 23 this year with an interest rate of 28%, as per the document. Punam says she had to pay installments every fortnight. After her husband's accident, the family's income is now nearly negligible, making it all the more challenging for them to repay the loan. Both men were treated at private hospitals. 'We don't get admission in government hospitals,' she says. The other women nod along. Parvati Devi, 38, says her husband works in Bengaluru, Karnataka, as a daily wage labourer. He left 15 days ago and will return only next year. 'We had to borrow money for our eldest daughter's wedding,' says Parvati, who also belongs to the Musahar community. 'We borrowed nearly ₹1.5 lakh from the local money lender four years ago. Unable to repay the loan, I took three loans from three microfinance institutions.' Her total liability amounted to ₹1.35 lakh and she had to pay monthly installments of about ₹7,000. 'Agents never fail to turn up' Chandra, Punam, and Parvati sought loans for weddings or for treatments in hospitals and struggled to repay the amounts. Many of these women accessed microfinance institutions through group lending. In this process, borrowers form small groups and the members of the group are jointly liable for each other's loans. Banks appoint agents to recover overdue loan payments or outstanding debts. The women say recovery agents never fail to turn up, and the amount of money their families have is usually never enough to meet the final sum. This week, a recovery agent stood at Parvati's door, threatening and abusing her the entire day. 'I was not scared,' Parvati says. 'I shouted at him as well. He said he would file a case against me. I told him, so be it.' The recovery agent left only after she managed to put together the amount, which fell short of ₹1,000, she says. Mina Devi is due to pay her monthly instalment of ₹2,450, but she is ₹50 short. 'He [the recovery agent] won't take the amount until I give him the full amount,' she complains. Mina worries about his response. 'Last time he told me, 'Why don't you go to the road and beg? And in the process if you die, the loan will be waived off.'' According to the RBI, when a borrower dies and there is no collateral, the lender can recover the amount from the legal heirs, and only up to the limit of what the heirs inherit. Mina's husband spends at least six months working in the fields in Punjab, so she has to deal with the agents on her own. 'When a male member of the family is not around, the agent hangs around for hours,' she says. Rekha Devi has three separate loans to repay, with the total liability amounting to close to ₹1 lakh. 'He [recovery agent] asked me why I don't sell my body if I have no money to pay the instalment,' she says. The women say the agents often threaten to take away possessions they have painstakingly collected over the years — beds, pressure cookers, gas cylinders, even the odd plastic chair. In Somini Devi's case, this became a reality. Somini's husband is no more. She has six children — three daughters and three sons — and all of them are married. She says she has been left alone to repay the loans she borrowed for their weddings and for other expenses. 'The recovery agent took away everything I had — a table, a chair, my bed, the cooker, the gas cylinder, and even my supply of wheat for the year. He stripped my house empty.' When asked if she reported the incident to the police, she stares blankly. 'How can we?' she murmurs. The women say at least 20-25 families in their village alone have fled fearing recovery agents. As they start counting and naming the families, many of them turn towards Pawan Devi. Pawan took loans from five microfinance institutions for her son's wedding, but she has been unable to repay the amount. Pawan and her family fled the village, spent more than a year in Punjab, and returned only last week. Pawan cannot recall the name of the village where she and her family stayed. 'Barring the biting cold, it was better there,' she says. 'The landlord didn't charge us for electricity or water. There were clean toilets. And we had a regular income working in the fields.' Pawan says what she cherished the most about her stay in Punjab was the absence of recovery agents. But the agents she dreads are now back at her doorstep. 'They come every other day. Sometimes they stand outside for hours. Sometimes they enter the house and start rifling through our papers. The other day, they took away my son's Aadhaar card,' she says. Around 30 kilometres away at Navtol village in Bhawanipur panchayat of Darbhanga district, Mahesh Kumar Roy, who says he is a recovery agent with Muthoot FinCorp, is on his daily rounds of the village. Mahesh, who hails from Darbhanga, goes from house to house on his motorcycle. He pulls out the sheaves of papers rolled up between his motorcycle handles and runs his finger along the names. 'Since 2022, when I joined the company, I have been given 1,100 households to track. At least 450 families who defaulted on their loans have disappeared. I make regular rounds, but all I see is locked homes,' he says. Mahesh adds that people 'disappear only after they have paid 15-16 installments' and 'after we have managed to recover at least 60% of the principal amount.' Mahesh prides himself as a 'decent' agent. Aware of the reputation that recovery agents have, he looks at the crowd gathered around him and asks them whether he is intimidating or threatening. They all say 'no'. Rules on paper The RBI issued exhaustive guidelines in 2022 collating the piecemeal directives it had issued earlier. It said that the lenders must 'provide the flexibility of repayment periodicity on microfinance loans as per borrowers' requirement'. That is, the repayment period of the loan must be moulded to the requirements of the borrowers, rather than the needs of the lender. To ensure that microfinance loans do not unduly burden the borrowers, the RBI directions also include a provision that says each regulated lender must ensure that the monthly repayment burden of a household should not exceed 50% of the monthly income of that household. RBI also has a separate set of guidelines for recovery agents. It defined what would be deemed as harsh methods, such as use of threatening or abusive language, persistently calling the borrower and/or calling the borrower before 9:00 a.m. and after 6:00 p.m., harassing relatives, friends, or co-workers of the borrower, publishing the name of borrowers, the use or threat of use of violence or other similar means to harm the borrower or borrower's family/assets/reputation, or misleading the borrower about the extent of the debt or the consequences of non-repayment. However, the regulations on the interest to be charged on these loans simply say that the interest rates and other charges and fees on microfinance loans 'should not be usurious', and that the RBI would scrutinise this aspect of the loans. Andhra Pradesh, Telangana and Assam have specific regulations for microfinance. Several other States such as Kerala, Gujarat, Tamil Nadu, Karnataka, Maharashtra, and Madhya Pradesh have laws regulating money lenders, which also include microfinance institutions. Assembly elections are scheduled in Bihar in October, but there is no political thrust in the State on bringing in any regulatory mechanism in this regard. Jayati Ghosh, Professor of Economics at the University of Massachusetts Amherst, U.S., says it is not surprising that the RBI guidelines for microfinance institutions are not being implemented since there is often a lack of implementation of State policy. She also says there are fundamental flaws in the microfinancing model. 'While it makes credit accessible for the poor, there is high interest and lack of monitoring of how repayment is ensured, which allows for threats, intimidation, and pressure to take on multiple loans,' she says. 'In many places, linkages with banks through the SBL (SHG-Bank Linkage Scheme) have been provided, but these also provide limited funds. Only in States where these SHGs are effectively co-operatives that create income-generating opportunities (such as Kerala's Kudumbashree) has this been more successful.'

Gaza, Ukraine and beyond: Is Trump's bid to be a global peacemaker falling apart?
Gaza, Ukraine and beyond: Is Trump's bid to be a global peacemaker falling apart?

First Post

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  • First Post

Gaza, Ukraine and beyond: Is Trump's bid to be a global peacemaker falling apart?

The United States cutting short Gaza ceasefire talks this week plunges one of President Donald Trump's pushes to solve global conflicts into new uncertainty. read more The United States' decision to withdraw from Gaza ceasefire negotiations this week has cast fresh doubt over President Donald Trump's attempts to resolve some of the world's most intractable conflicts. The faltering of talks aimed at ending the 21-month war between Israel and Hamas marks another setback for Trump whose efforts to broker international peace agreements have stalled across multiple fronts. Though back in office for only six months, the Republican president has sought to position himself as a global peacemaker. Some of his aims, such as ending the Ukraine war before taking office, have yet to materialise. STORY CONTINUES BELOW THIS AD While Trump has cited humanitarian motives for his diplomatic pursuits, he has also been vocal about his desire to win the Nobel Peace Prize. Several allies have nominated him for the honour. Ceasefire efforts in Gaza: No major progress Trump's special envoy, Steve Witkoff, announced Thursday that the U.S. was recalling its negotiating team from Qatar. Talks there had failed to yield a breakthrough. Witkoff accused Hamas of not engaging in 'good faith', though he did not elaborate. Despite a visit to Washington earlier this month by Israeli Prime Minister Benjamin Netanyahu, the negotiations have produced little progress. Witkoff said the U.S. would now 'consider alternative options to bring the hostages home', but officials declined to provide further details. Asked about the issue on Friday, Trump told reporters that Hamas was uninterested in a deal and added, 'I think what's going to happen is they're going to be hunted down.' Ukraine war: Stalemate persists Trump previously vowed to end the Russia-Ukraine conflict within 24 hours of assuming office, but the war continues with no sign of resolution. Despite increasing criticism of Russian President Vladimir Putin, Trump has not supported a bipartisan U.S. sanctions bill. Instead, he gave Russia 50 days to accept a peace plan, delaying punitive measures. STORY CONTINUES BELOW THIS AD This delay has allowed Moscow to intensify its military offensive. Ukrainian President Volodymyr Zelenskyy has reiterated his willingness to hold direct talks with Putin, but Russia has rejected the offer. Lower-level negotiations held in Istanbul on Wednesday ended without progress. Russia continues to demand that Ukraine withdraw from four regions it annexed in 2022 and abandon its NATO ambitions, terms Kyiv and its Western backers have rejected. Iran conflict: Ceasefire but no nuclear deal The US and Israel recently carried out joint strikes on Iran's nuclear infrastructure, leading to a fragile ceasefire. However, Washington has not yet reached any agreement with Tehran over its nuclear programme. An Iranian diplomat said this week that Tehran is open to talks with the US but only if steps are taken to rebuild trust. Meanwhile, Iran is also exploring a separate negotiation path with Britain, France and Germany—three parties to the 2015 nuclear deal that Trump withdrew from during his previous term. Foreign ministers from the four countries met Friday in Istanbul, warning that sanctions could be reinstated if there is no movement on a new deal by August. STORY CONTINUES BELOW THIS AD Progress on some fronts Despite the setbacks, Trump has managed to broker certain regional agreements. In June, the US facilitated a peace accord between Rwanda and the Democratic Republic of Congo, ending years of tension. The agreement includes commitments to cease hostilities, respect each other's sovereignty and grant US access to critical minerals. In May, the Trump administration claimed to de-escalate tensions between India and Pakistan following cross-border strikes. However, India denied any international interference. Earlier in July, US special envoy Tom Barrack announced a limited ceasefire between Israel and Syria following Israeli intervention in the latter's internal conflict. While the ceasefire was hailed as a success, the episode disrupted efforts to normalise relations between the two nations. With inputs from agencies

India, Maldives sign UPI agreement during PM Modi's landmark visit
India, Maldives sign UPI agreement during PM Modi's landmark visit

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India, Maldives sign UPI agreement during PM Modi's landmark visit

During Prime Minister Narendra Modi's visit to the Maldives, he and President Mohamed Muizzu reviewed key bilateral issues, signed an agreement on UPI payments, and participated in symbolic events including a tree-planting ceremony, said Foreign Secretary Vikram Misri read more Indian Prime Minister Narendra Modi, center, and Maldives President Mohamed Muizzu, center right, watch a traditional welcome dance upon Modi's arrival at the airport, in Male, Maldives. AP Foreign Secretary Vikram Misri on Friday said that Prime Minister Narendra Modi and Maldives President Mohamed Muizzu reviewed the entire gamut of issues in the bilateral relationship during their engagements. Misri, while addressing a special briefing by the Ministry of External Affairs on the Prime Minister's visit to Maldives, said that the Network-to-Network Agreement between India's NPCI International Payment Limited (NIPL) and the Maldives Monetary Authority (MMA) on UPI in Maldives was signed. STORY CONTINUES BELOW THIS AD Misri said, 'The implementation agreement has been signed today. The technical work is now required, and people should be able to use UPI as soon as the technical work and the operationalisation of the MoU are concluded.' Misri highlighted that upon arrival, PM Modi was accorded a ceremonial welcome and a guard of honour. 'This morning, on arrival at the airport, the Prime Minister was warmly received by Maldivian President Mohamed Muizzu and members of his Cabinet. This was a very special gesture by the President. The Prime Minister was also accorded a ceremonial guard of honour and welcomed with a special cultural performance. In the afternoon today, the Prime Minister and Maldivian President Mohamed Muizzu held restricted and delegation-level talks. This gave both leaders the opportunity to review the entire gamut of issues in the bilateral relationship,' he said. Misri said that PM Modi and Muizzu participated in a symbolic tree planting ceremony at Sultan Park under 'EK Ped Maa Ke Naam' (a tree for Mother) initiative. Misri said, 'The two leaders were together for a tree plantation event which is being carried out under the initiative taken by PM Modi in India, 'EK Ped Maa Ke Naam'. PM Modi also handed over two BHISHM (Bharat Health Initiative for Sahyog Hita & Maitri) Cubes that will be of great relevance in medical emergencies,' he said. STORY CONTINUES BELOW THIS AD On the announcement of the initiation of negotiations for a Free Trade Agreement between India and the Maldives, Misri said, 'I cannot point to an exact timeline. This is an FTA that we should be able to conclude rather quickly.' Misri while answering a question regarding the now deleted social media post of Abdullah bin Mohammed Ibrahim, brother-in-law of Muizzu, reportedly criticising PM Modi amid his visit to the Maldives, said that India-Maldives ties have withstood such comments. 'Our ties are strong enough to withstand some of these passing remarks that have been made and have also withstood the test of time. I would prefer to look forward. By going with everything that has happened today and especially in the past 9-10 months since President Mohamed Muizzu visited India, the future is undoubtedly and unquestionably bright.' PM Modi is on a two-day visit to the Maldives at the invitation of President Muizzu.

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