Some Chinese companies, reeling under the impact of steep US tariffs, are reaching out to Indian exporters to help fulfil orders and retain their American customers as the trade war has upended global commerce.
According to a Bloomberg report, at the ongoing Canton Fair in China, several Indian firms were approached by Chinese companies seeking partners to supply goods to their US clients. In exchange for securing sales, Indian exporters would pay a commission to the Chinese businesses, Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO), told Bloomberg in an interview.
Chinese exports to the US are currently subject to tariffs as high as 145 percent. In contrast, goods shipped from India attract a 10 percent levy, which could rise to 26 percent in July if Donald Trump proceeds with reciprocal tariffs after a 90-day suspension ends.
During Trump’s first term, many Chinese exporters had sought to bypass US tariffs by relocating production to Southeast Asia, setting up factories in Vietnam or shipping goods via countries like Thailand. However, with Trump now extending 46 per cent tariffs to countries like Vietnam, Indian exporters are increasingly seen as an alternative source.
India’s strict curbs on Chinese investment, however, prevent Chinese firms from easily setting up operations or using India as a transshipment hub. Instead, at the Canton Fair, Chinese businesses proposed that Indian firms supply goods to US buyers either under Chinese brand names or through co-branded agreements, Sahai said.
Most of the enquiries, he added, were in sectors such as hand tools, electronics, and home appliances, with hopes that some US companies might eventually start dealing directly with Indian suppliers. The commission would be negotiated between the buyers and suppliers.
One such company, Jalandhar-based OayKay Tools — which manufactures hand tools such as drop forge hammers and cold stamp machines — is currently in discussions with both China-based American firms and Chinese companies to serve the US market.
"Four to five companies have approached us," said Siddhant Aggarwal of OayKay Tools. "They have a brand reputation to maintain, so they need to ensure continuous service to their customers."
The boost in export enquiries comes at a time when India is making headway in trade negotiations with the US, aiming to secure a deal that could shield Indian exporters from higher tariffs. During a visit to India last week, US Vice President JD Vance emphasised the growing collaboration between the two countries and highlighted the progress made toward a bilateral trade agreement expected to be concluded by autumn.
Meanwhile, tensions between the US and China show no signs of easing. Beijing has described the high tariffs as “meaningless”, while Trump asserted that discussions with China were ongoing, despite Beijing’s denials and demands for the removal of all unilateral tariffs.
It remains unclear how far Washington will allow Indian companies to bridge the supply gap left by Chinese exporters, as the US continues to apply pressure on Beijing for concessions.
While American participation at the Canton Fair was sparse this year, the impact of the new tariffs dominated discussions. Trump's 90-day pause has also prompted many Chinese firms to intensify investments in Southeast Asia in an effort to circumvent US trade barriers.
Victor Forgings, another Jalandhar-based hand tools manufacturer, is also seeing new opportunities emerge amid the US-China standoff.
"We were approached not only by Chinese suppliers seeking help to fulfil US orders but also by American companies with plants in China that are now unable to supply due to the tariffs," said Ashwani Kumar, managing partner at Victor Forgings, which has been producing hand tools such as pliers, hacksaws and hammers since 1954.
Kumar said Victor Forgings is planning to expand by setting up two additional manufacturing facilities to meet rising demand. He added that some American companies are willing to share technical know-how to help Indian firms bolster their production capabilities.
