The “Great Transshipment Scam”, an August 2026 White House report, accuses India’s Pune–Gujarat–Chennai production belt of pumps and compressors that export to the U.S. as being largely just pit stops in the movement of Chinese goods to America where no meaningful value addition is made. The report says China-linked exporters use jurisdictions like India for “both limited production activity and logistics-side routing”.
Parsing of figures and speaking to industry sources, however, reveals that there is little Chinese ownership of such pumps/components sent to the U.S. by Indian/India-based companies. Many are large U.S. multinationals with global production centers. They are typically listed in the New York Stock Exchange and follow sourcing strategies that give them cost and technology advantages. The profits of these American companies go to their shareholders or reinvested for growth. Sourcing strategies are complex and navigate cheap raw materials and manufacturing, tariff differential and geopolitics to cut costs. For instance, an American pump company with a plant in India recently purchased two branded motors from Singapore under India’s Advance Authorisation scheme that allows duty-free import of raw materials and components needed to make products for export. This company exports its products across the globe, including the U.S. An Indian pump manufacturing company in the small and medium-scale (SME) category exports pumpsets, including to the U.S. Since the parts for these pumps are not available in India, it imports them from China, paying Indian Customs Duty, potentially nullifying tariff differential.
An Indian pump draws a tariff of 10% while entering the U.S. One coming from China attracts 10% to 25-35% as per Section 301, which the Trump administration slapped on China in its first term for alleged IP theft, discriminatory business practices, forced technology transfer and so on. The report alleges that ever since Section 301 started applying to China, imports from China have dipped but imports from other countries such as India, Mexico and Vietnam have gone up at exactly the same rate and volume, which the U.S. government has interpreted as inference of a “transshipment scam.
And this is a global phenomenon. Six are German-owned and they too are bluechip firms. The industry report puts the total value of Indian pump exports to the U.S. at some Rs. Industry sources say only a fraction of this comes from Indian companies.
A reliable industry report that tracked HS Code 8413 imports to the U.S. from across the world barring leaders — China, Taiwan and Italy — shows that some 85% of the import value comes from Canada, which is not on the list of dubious nations in the White House report. Mexico comes next with more than 11% while India comes third contributing a little over 2% and Brazil and Vietnam are fourth and fifth with much less than 1%. Out of the top 50 suppliers, 16 are U.S. firms, among the most well-known OEMs of pumps. Four are Japanese, 3 South Korean and 1 each Swiss, UK, Chinese, Hong Kong and so on. 4,000 crore.
