New Delhi, March 18 - An annual trade deficit of as much as $150 billion with the US alone does not allow India room to retaliate in the event of a global trade war being unleashed by recent protectionist trends in the developed world, since the country's imports are mostly of an essential nature, industry chamber Assocham said on March 18.
The Associated Chambers of Commerce and Industry of India (Assocham) statement here comes in the wake of US President Donald Trump slapping import tariffs of 25% on steel and 10 per cent on aluminium earlier this week, unfolding the prospect of an all-out global trade war.
"He (Trump) has also said that more items could be brought under high import tariff, triggering fears of retaliation from Europe, Japan and China. As far as India is concerned, even if we want to retaliate we cannot do it without pain since, our imports are of essential nature," Assocham said.
"We cannot flex too much of our importing muscle, even if our exports face consequences of trade war and are subjected to tariff barriers.
"So, the best course would be to keep engaged with the major trading partners, without aligning ourselves too much into a single bloc," the statement added.
The industry lobby suggested that in cases where exports are affected, India must engage bilaterally and use the channel of the World Trade Organisation (WTO).
"However, the WTO route could be time consuming. So, the best course would be to stay bilaterally engaged," it said.
Citing India's hefty trade deficit with the US, which is marked by an import bill of $450 billion against exports of about $300 billion, Assocham said almost a fourth of such imports would be crude oil and related items.
"Then, there are essential imports of plastics and fertiliser for which the country does not have an immediate domestic capacity," it said.
The industry body pointed out, however, that even before the outbreak of the recent trade war, India has seen a huge jump of 21% in annual steel imports at $1.15 billion in February, and of non-ferrous metals by 33% at $1 billion.