Trump’s Tariffs Push Chinese Firms Closer to India

Chinese companies are increasingly turning their attention to India as a strategic market and manufacturing base, thanks to escalating trade tensions with the United States under President Donald Trump's administration. Faced with high tariffs that threaten their competitiveness in the U.S., Chinese firms are now more open to working with Indian partners — even if that means giving up majority control.

One of the most notable developments is the interest of Reliance Industries in acquiring a significant stake in Haier India, a leading player in the home appliance sector. Haier is reportedly considering selling 25–51% of its Indian operations to a domestic partner. The company aims to localize manufacturing and secure its future in the Indian market by aligning with a strong Indian stakeholder.

In another move, Shanghai Highly Group — a major Chinese compressor manufacturer — has reopened talks with Tata-owned Voltas for a joint manufacturing venture. The Chinese firm, which earlier insisted on maintaining a controlling stake, is now willing to settle for a minority share.

This shift in approach is a direct result of the changing global trade dynamics. With the American market becoming less accessible, India is being seen as a viable alternative — both as a consumer base and a global manufacturing hub.

India, however, is tightening its regulations to protect domestic interests. The government is considering a cap of just 10% equity for Chinese firms in electronics joint ventures, especially where critical technology or sensitive sectors are involved. Preference is being given to technical collaborations and supply chain partnerships rather than brand-led investments.

Officials have made it clear that any green light for Chinese participation will require Indian majority ownership, Indian-led boards, and meaningful value addition or technology transfer to the local ecosystem. The idea is to boost domestic capabilities while ensuring strategic control remains with Indian entities.

In parallel, some Chinese exporters affected by U.S. tariffs have approached Indian firms with proposals to help fill orders for American clients. Instead of setting up shop in India, which remains restricted due to investment rules, these firms are seeking partnerships where Indian companies manufacture and export on their behalf — sometimes under co-branded labels or through commission-based agreements.

While this offers Indian exporters a new opportunity, experts caution against becoming mere intermediaries. They urge businesses to focus on genuine value addition, transparency, and long-term capability building to take full advantage of this shifting global supply chain.

In essence, the trade war between the U.S. and China is redrawing commercial alliances — and India is emerging as a key player in this evolving landscape.