The White House has drawn attention to India's manufacturing hubs in Pune, Gujarat and Chennai in a new trade report examining alleged Chinese transshipment practices. The report compares these Indian industrial centres with Cincinnati, Dayton and Columbus in the United States, referring to them as "ugly sister cities."
Despite the striking phrase, the comparison is not about the cities themselves. Instead, it highlights manufacturing regions that produce similar industrial goods and compete in global markets.
The report forms part of a broader US effort to crack down on Chinese exports that are allegedly routed through third countries to avoid higher American tariffs.
What is the White House's 'Great Transshipment Scam' report?
The report, titled The Great Transshipment Scam: Rise, Scope and Costs, examines how Chinese products may be entering the US through intermediary countries after limited processing or relabelling.
According to the White House, some goods manufactured in China are allegedly shipped to another country where they undergo minimal changes before being exported to the US as products originating from that country. Such practices can potentially help exporters avoid the higher tariffs imposed on Chinese imports.
However, the report also acknowledges that not every shift in manufacturing away from China is suspicious. Many companies have genuinely diversified their supply chains and established manufacturing facilities in countries like India, Vietnam and Mexico since US-China trade tensions escalated.
Why has India been included?
India has been placed in the report's Tier 1 category of what it describes as the "Shadow Transshipment Network," alongside countries such as Canada, Japan, Mexico, South Korea, Taiwan, Israel and members of the European Union.
The report clarifies that this classification does not accuse India of widespread tariff evasion. Instead, it identifies India as a major manufacturing economy with strong trade links to both China and the United States, making it an important part of global supply chains.
According to the report, countries in this category have legitimate manufacturing capabilities, although US authorities believe some trade flows may require closer scrutiny.
The White House also cites an analysis estimating that nearly $67 billion worth of goods destined for the US were routed through Mexico, India and Vietnam in 2025. The estimate covers all three countries collectively and does not attribute the entire figure to India.
Why Pune, Gujarat and Chennai?
The report links Pune, Gujarat and Chennai with the production of industrial equipment such as pumps and compressors. These manufacturing clusters are compared with American industrial regions including Cincinnati, Dayton and Columbus, which produce similar products.
The "ugly sister cities" phrase is used to describe overseas manufacturing centres that compete directly with US industrial regions. It is not related to official sister-city partnerships or the appearance of the cities.
Importantly, the report does not accuse companies operating in Pune, Gujarat or Chennai of violating US trade rules. Instead, it uses these manufacturing hubs to illustrate how imported products may compete with American manufacturers if questions arise regarding their country of origin.
Does using Chinese components make an Indian product Chinese?
Not necessarily.
Indian manufacturers routinely import machinery, electronic parts, steel and other components from multiple countries, including China, before producing finished goods domestically.
The key issue for US authorities is whether substantial manufacturing and value addition take place in India. Products genuinely manufactured in India generally qualify as Indian-origin under applicable trade rules, whereas goods that are merely repackaged or minimally processed may face greater scrutiny.
The report distinguishes between genuine manufacturing activities such as assembly, testing and production, and limited activities like relabelling, warehousing or simple re-exporting.
How serious does the US believe the issue is?
The report presents several estimates, placing the possible value of China-linked transshipment between $40 billion and $303 billion annually, with a central estimate of approximately $75 billion.
It also estimates that such trade practices could reduce US tariff revenue and affect domestic manufacturing employment. These figures are economic projections rather than confirmed cases of illegal trade.
To strengthen enforcement, the White House has proposed using artificial intelligence through a system called Detective Border, which would analyse shipping routes, production capacity, company ownership and supply-chain data to identify potentially suspicious shipments.
Why this matters for India
India has emerged as a major alternative manufacturing destination as global companies diversify away from China. However, many Indian industries continue to rely on Chinese raw materials, machinery and intermediate components.
As the US tightens customs checks, Indian exporters may increasingly need to demonstrate that substantial manufacturing has taken place within India and provide detailed documentation regarding the origin of components and production processes.
The White House report does not suggest that using Chinese components automatically makes Indian products Chinese. Instead, it signals that future scrutiny will focus on whether goods are genuinely manufactured in India or merely routed through the country before reaching US markets.
