Chinese Suppliers Provide US Export Orders to Indian co.s for Commissions

 Chennai:Indian exporters are receiving several orders from the US through Chinese suppliers who want to retain their business connections till the uncertainties on the trade front are resolved. They are charging a small commission for this service.

As Chinese exporters are facing a 245 per cent tariff on its goods landing in the US shores, suppliers from the country are seeking ways to retain their valued customers.

“These are Chinese suppliers who do not want to let go of their US customers. They request their US buyers to provide orders to Indian exporters in their respective product categories. For the orders coming from the US through them to Indian suppliers, Chinese exporters charge 3 to 5 per cent commission,” said Ajay Sahai, director general of Federation of Indian Exporters Associations.

This arrangement will continue in the interim till the muddy trade waters clear. Engineering goods, including machine tools and hand tools, textiles, leather and footwear are some of the categories which have received increased orders through Chinese suppliers.

India is in a sweet spot as it has a basic tariff of 10 per cent. Further, the US is more lenient towards Indian exporters compared to those in South East Asia, where China has significant investments, manufacturing units and influence. India is also likely to be the first country to enter a bilateral trade agreement with the US. This arrangement will help Chinese companies to retain customers during the 90-day period.

“However, in many sectors we are not able to meet the demand as our manufacturing ecosystem does not have enough capacities. It is not possible to expand capacities in the interim without any certainty on the order flow in the future,” he said.

Meanwhile, several US buyers are directly approaching Indian exporters as the scrutiny by the customs authorities is expected to be lesser if the shipments are from India against those from South East Asian countries.

Further, Chinese players are also offering several discounts for their products to Indian buyers. “Discounts in raw materials and machinery are beneficial for Indian manufacturers, but we have to be cautious about dumping in finished products. In the case of plastics, it is the other way around. As some of the large companies are present in the raw material front, they were able to get anti-dumping duties imposed on Chinese imports. However, the finished plastic product segment is dominated by SMEs and they are not able to lobby for ADDs,” said Jayesh Rambhia, past president of All India Plastic Manufacturers Association.