Trade war hurting our US business, says Kumarmangalam Birla; warns of more Chinese action

Even though the group has a diversified presence across the globe which acts as a hedge, the current spate of tariff wars between the two largest economies have impacted the Aditya Birla group's business in the US, chairman Kumarmangalam Birla said Tuesday and warned of more dumping by Chinese in the domestic market.

He said the domestic market can expect a lot of Chinese dumping, as they will be unable to find a market in the US because of the heavy duties.

"For the first time because of these tariff wars, there is some sort of impact on our business in the US," Birla said speaking at the third Bloomberg India Economic Forum this evening. The group draws a considerable portion of its metals (aluminium business from its US subsidiary Novelis)

He made the comments while answering a question on bureaucratic troubles faced by companies, in which he said there is far too less need for meeting government officials while operating in the US compared to India, even though a lot of work on ease of doing business has happened under the present government.

Earlier, he said either by design or inadvertently, businesses of his group are spread across geographies which acts as a natural hedge in periods of bad times like the ongoing tariff wars between the US and China.

He said the group has presence in the US, South America and Europe which acts as the hedge.

Citing aluminium, on which the US has imposed a 25 per cent duty on Chinese imports, he said a lot of the products will not be able to go to the US and may end up here where the consumption story is still strong.

"I see there is some risk in terms of Chinese goods coming into the economy," he said.

It can be noted that over the past few months, the Trump administration has upped the ante on tariffs, seeking what it calls fair trade and reciprocity from its partners mainly China, which is the world's largest exporter, and thus one of the prime targets of these measures, more of which are due next week.

Birla said he hopes for normalcy to return at the earliest and that the trade wars do not last long. He, however, said the Indian growth story will not be affected because of the trade wars.

"A lot of our growth is propelled by domestic consumption and not much by exports," he said.