Trade War: The Future of India China Trade Relations

The winds of change due to globalization and free movement of goods, services and capital has taken a huge hit of late due to the trade war between China and USA. USA perceives that it’s huge Current Account Deficit (CAD) vis-à-vis China is due to its unfair trade practices, infringement of Intellectual Property Right (IPR) provision by China. The paper seeks to examine what kind of strategy India should adapt in such a scenario, so that its Balance Of Trade (BOT) becomes favourable for it in the long run. After weighing two options, the paper strong argues that India should improve trade ties with China while fostering free trade with other countries. As a viable strategy, it must improve its competitiveness in exports by adopting Industry 4.0 standards and bolster its Special Economic Zone (SEZ) foot print, with a view to make a real mark as global manufacturing hub and improve its value addition by adopting state of art of technologies like AI and factor productivity.