Along the border with China a troop standoff is not the only worry for the Indian policy makers.
A flood of cheap Chinese goods into the country is intensifying the weaker yuan, threatening to hurt India's struggling factories and blow out its biggest bilateral trade deficit. To support domestic companies so the authorities should take steps as well as curb gains in the in the rupee, said by Soumya Kanti Ghosh, chief economic adviser at State Bank of India, the nation's biggest lender and one of its top currency traders.
A currency manipulator to brand China and come as Indian and Chinese soldiers face off in a remote area of the Himalayas, the comments follow years of U.S. threats. As a new national sales tax disrupts supply chains the risks to India's economy are more pronounced.
India mainly ships electronic products, engineering goods and chemicals from China, its biggest trading partner, with whom its trade deficit has ballooned nine-fold over the past decade to $49 billion in 2016. The fiscal year through March 31 this figure was about $51 billion, on imports of $61.3 billion.
The rupee has strengthened 6 percent versus the U.S. dollar this year, while the yuan has gained 4 percent. China's currency has weakened some 2 percent against the rupee, extending last year's 4 percent decline, the steepest fall among 10 major Asian currencies.
"If the trend of rupee appreciation continues making goods from China cheaper, thereby, our imports from China could very well exceed the level of $61.3 billion attained in financial year to March 2017," Ghosh said.