Economists foresee Indian exporters weathering these shifts with comparatively little disruption as the United States institutes a 27 per percent duty on Indian exports. The move, which was authorised by former US President Donald Trump, is expected to change the equation of international trade. India’s inward-looking economy will cushion the effects of the duty hike compared to other large Asian economies like China, Japan, Vietnam, and Sri Lanka.
India’s Role within the Tariff System
India’s position on the global tariff map is still relatively stable, says Sonal Badhan, a Bank of Baroda economics specialist. “Among the bigger emerging markets of Asia, US imports from India have one of the lowest tariff rates at 26 per cent over and above the baseline duty of 10 per cent.” The Philippines has the only other market facing an even lower 17 per cent and the 10 per cent baseline duty,” Badhan said.
Indian exporters are also provided the opportunity to remain competitive compared to their Chinese, Thai, and Vietnamese competitors because tariffs are considerably higher in these nations in America due to the relatively lower Indian tariffs.
Industry leaders react to tariff impositions.
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) recognised the possible shifts in world trade trends that could arise due to the increase in tariffs. Sanjay Nayar, the ASSOCHAM President, emphasised the importance of assessing the real impact of these tariffs on India’s export environment.
“The recent tariff actions by President Trump will result in a significant realignment of global trade and manufacturing supply chains.” Nayar added that India, which is sitting at 26 per percent on the tariff rate scale, needs to assess the total impact and realign its export strategies in response.
India’s Strategic Economic Policies
The necessity for India to bolster its domestic economic foundation in the midst of today’s global trade transformations was underscored by analysts. iramal Group Chief Economist Debopam Chaudhuri advised that India needs to prioritise making sure there is sufficient liquidity within the banking system. Chaudhuri added that Indian banks must concentrate on lending liberally to retail consumers and small business operators in order to have healthy domestic consumption.
In addition, Kunal Chaudhary, Tax Partner, EY India, highlighted the opportunities and challenges arising from the new tariff structure. “Indian producers need to prepare for more competition in other markets, even as lower tariffs on Indian products compared to Chinese and Vietnamese products create an arbitrage benefit.” He explained that nations that earlier focused on US exports might now divert their trade efforts to other markets, thus increasing competition there. e Sectoral Effect of US Tariffs on Indian Exports
The newly imposed tariffs will impact major Indian sectors in different ways.
Steel, aluminium, and auto-related products: These industries are likely to face cost hikes and reduced demand from the US market due to a 25% tariff hike.
The new tariffs exclude pharmaceuticals, semiconductors, copper, and energy products, ensuring stability in India’s trade with the United States in these areas.
Other Indian Exports: The retaliatory rate of 27 per cent will be levied on most of the remaining products, which is slightly higher than the 26 per cent that was earlier reported.
Adapting to the changing global trade landscape
To develop, industry leaders and policymakers will need to reassess their strategies as India implements modifications in response to the new tariff regime. It will be essential to fortify domestic industries, enhance competitiveness in international markets, and establish trade alliances with other nations to mitigate the impact of US tariffs.
India has the opportunity to strengthen its position in the global export market, despite the challenges presented by the new trade policies. By optimising its manufacturing ecosystem and capitalising on strategic trade alliances, India can maintain consistent economic growth despite changing global trade patterns. Source ANINEWS
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