India Braces for Chinese Dumping as Trump Tariffs Close American Markets
As President Trump hammers China with a brutal 145% tariff wall, Beijing is starting to look for other places to offload its massive surplus of industrial goods. With American doors closing, India is now in the crosshairs.
Chinese officials insist their intentions are peaceful, but the recent surge in cheap imports tells a different story. For India, the warning signs are hard to ignore. From textiles to electronics, and from pharmaceuticals to steel, Chinese goods are flowing into the country at record speed. Local manufacturers are beginning to buckle under the pressure.
This isn’t just another case of global trade competition. It’s starting to feel like a well-practiced strategy. China, squeezed by trade war setbacks and its own slowing economy, is shifting into high gear to flood nearby markets with cheap products. And India, despite repeated efforts to become self-reliant, may not be prepared for what’s coming.
Factories Slow as Cheap Chinese Goods Pour In
In the textile town of Pallipalayam in Tamil Nadu, the impact is already being felt. At a spinning mill run by 64-year-old Thirunavkarsu, production has dropped sharply. His warehouses are now filled with unsold viscose yarn.
“Our raw material is not as cheap. We can’t match these rates,” he told the BBC, explaining that Chinese yarn has undercut his prices by about 15 rupees per kilogram.
Jagadesh Chandran, a member of the South India Spinners Association, confirmed the trend. “Nearly 50 small spinning mills are slowing production,” he said, adding that many could shut down if the dumping continues.
This kind of disruption is not accidental. Beijing has spent years building excess production capacity across sectors. Now, with limited access to American markets, those goods are being dumped elsewhere—India included.
China Plays Nice in Public, But India Isn’t Buying It
China’s Ambassador to India, Xu Feihong, tried to calm nerves with a public letter in The Indian Express. “We will not engage in market dumping or cut-throat competition, nor will we disrupt other countries’ industries and economic development,” he wrote. Xu even claimed that China wants to import more high-quality Indian products.
But many Indian economists and industry leaders remain unconvinced. With the trade deficit between India and China ballooning to $100 billion, and imports jumping 25% in March alone, Chinese words are not matching their actions.
Ajay Srivastava, founder of the Global Trade Research Initiative, warned that this is more than just a temporary trade imbalance. “This isn’t just a trade imbalance. It’s a structural warning,” he wrote in a recent post. “Our industrial growth, including through PLI [Production Linked Incentive] schemes, is fueling imports, not building domestic depth.”
That shortfall in self-reliance is exactly what China seems to be targeting. Beijing knows India is dependent on imported Chinese components to build phones, computers, solar panels and more. If India cracks under the pressure, Chinese dominance in Asia could deepen further.
A Pattern of Dumping with a Sinister Edge
The problem isn’t new. In the early 2000s, China dumped key pharmaceutical ingredients—like penicillin G and folic acid—into Indian markets at absurdly low prices. When Indian producers collapsed, China raised prices dramatically, leaving India at its mercy.
Trade expert Biswajit Dhar said China has “mastered the art of dumping as a weapon.” Once a country becomes dependent, China can exploit that weakness. That model of first flooding, then dominating a foreign market, has been repeated across continents.
India has responded in fits and starts. In March 2025, it imposed anti-dumping duties on five Chinese products including soft ferrite cores, insulated flasks, and PVC paste resin. The duties ranged from $89 to $1,732 per tonne. But while such moves offer some protection, they may not be enough.
The Directorate General of Trade Remedies, India’s anti-dumping watchdog, has ramped up its investigations. In 2024, 79% of all anti-dumping cases filed were against China. Still, imports continue to rise. Despite anti-dumping rules, India’s imports from China rose over 10% in the 2024-25 fiscal year.
“China will now dump more than ever,” warned trade columnist Ashwani Mahajan. “With the US effectively shutting its doors, the fear is that a cornered China will dump even more aggressively and flood other markets.”
Beijing’s Tactics Are Becoming More Sophisticated
India’s task is made harder by China’s ability to evade enforcement. Chinese exporters are known to slightly alter products to skirt trade barriers. Others mislabel goods or ship them through third countries in Southeast Asia to disguise their origin. The U.S. has started cracking down on this with legislation, including the Axing Non-Market Tariff Evasion Act. But India has yet to follow suit.
Even when India does act, Chinese companies adapt. They shift manufacturing to partner nations in ASEAN or open new firms to replace those hit with duties. As a result, the Indian market remains exposed to the same goods through new channels.
Mahajan argues that India must tighten its enforcement, monitor rerouted goods, and even consider following U.S. legislative models to block Chinese goods made outside China.
India’s Manufacturing Dreams at Risk
Despite Prime Minister Modi’s push for domestic manufacturing under schemes like Atmanirbhar Bharat and the PLI program, India remains dependent on China for critical components. Electronics, toys, chemicals, and machinery are all heavily sourced from Chinese suppliers.
India’s manufacturing share of GDP has declined from 19.6% in 1990 to just 14.3% today. Trade experts believe that unless the country protects its markets more aggressively, it risks falling further behind.
Akash Prakash of Amansa Capital warned that Indian companies are holding back investment because they fear “being swamped by China.” The ratings agency Icra reached a similar conclusion, pointing out that uncontrolled dumping can stall domestic industrial growth.
The Nomura research group added that countries with high import surges from China are more likely to see a sharp decline in manufacturing performance. India is showing early signs of this trend.
A Chance to Push Back
For all its current challenges, India also has an opportunity. With the United States cutting China off, India can use this moment to force a better trade balance and demand fairer competition. Experts like Biswajit Dhar say India must initiate a firm dialogue with Beijing while also reinforcing its trade defenses.
“This is an issue that India must flag, like most of the Western countries have,” Dhar said.
The question now is whether India will rise to the occasion or continue to rely on a partner who, despite smiling assurances, may be quietly preparing to flood Indian markets with cheap goods and tighten its grip.
