Such a situation developing is not ruled out as the unit value realisation from China's exports is low in most cases, giving rise to the inference that there is an "artificial" lowering of prices or dumping, says the study. This "anti-competitive" drive is largely due to the presence of MNCs in China, the study notes and points out that they account for nearly 45-50 per cent of its total exports.

Against this background, India will find it difficult to take any action against China, particularly when US prefers not to do so for pecuniary and personal reasons. And, there is no provision in the WTO to deal with such a situation. The possibility of such a threat from other neighbouring countries is also not ruled out. The result is that India may face big challenges in pushing up its goods in which it has a competitive edge in the US.

India is therefore taking up with the WTO to evolve a agreement whereby anti-competitive or dirty competition by artificially lowering of prices and dumping by WTO as well as non-WTO members is eliminated, says economic adviser in the commerce ministry HAC Prasad. The study on "India's and China's exports to the US: An Empirical Analysis" has stressed the need for such an agreement to ensure that Indian goods do lose out to China after it is admitted in the WTO. Prasad says US has been according the most-favoured-nation (MFN) treatment to China even before its entry in the world trade body.

The study concludes that there is an urgent need for diversification of India's export basket to reflect a dynamic change towards modern manufactures vis-a-vis traditional manufactures. Further, foreign direct investment should be given be given a big push to facilitate higher exports.

In addition, the study advocates de-reservation of some items in the SSI sector or a technological revolution in the sector.