U.S. Highlights India’s Trade Barriers Ahead of Reciprocal Tariffs Implementation
Ahead of the April 2 reciprocal tariffs, the USTR has flagged India’s high import duties and regulatory barriers. With an average tariff rate of 17%, India comes under scrutiny as it negotiates trade deals with the U.S. High agricultural tariffs and inconsistent customs practices exert pressure on U.S. exporters. Experts assert the need for bilateral engagement that respects India’s sovereignty and developmental priorities.
As the United States prepares to implement reciprocal tariffs on April 2, concerns regarding India’s high tariffs and regulatory barriers have been raised. The U.S. administration has specifically pointed out India’s substantial import duties on several sectors, including automobiles, agricultural goods, medications, and alcohol. These tariffs and abrupt changes, alongside non-tariff barriers, challenge American exporters and complicate ongoing trade discussions between the two nations.
A recent report by the United States Trade Representative (USTR) highlights that India’s average applied tariff rate is currently 17 percent, the highest among major economies, with non-agricultural goods averaging 13.5 percent and agricultural products at a striking 39 percent. The timing of this report coincides with President Donald Trump’s planned announcement of a reciprocal tariff strategy aimed at counteracting what he describes as longstanding “unfair trade practices.”
Trump’s forthcoming tariffs, which intend to affect all countries equally, are particularly directed at nations like India, the European Union, Japan, and Canada, as indicated by White House Press Secretary Karoline Leavitt. This has escalated concerns as the USTR outlines critical trade barriers that complicate negotiations between India and the U.S. for a bilateral trade agreement focusing on enhanced market access and reductions in tariffs and non-tariff barriers.
The U.S. has alleged that India has exploited tariff flexibilities within World Trade Organization norms to unilaterally increase import duties. Reports reveal that over recent Union Budgets, India has raised tariffs for over 100 American-export categories, especially in sectors like agricultural goods, IT hardware, and automotive components, often without adequate public discourse.
Further criticisms include India’s inconsistent customs enforcement and lack of notice regarding tariff modifications, which the USTR claims complicates the customs system. The report indicates that India’s tariff changes tend to surface during budget announcements with subsequent alterations made ad hoc, failing to provide locales for stakeholder comments, thus complicating the landscape for foreign businesses.
Additional concerns were raised regarding India’s stringent import licensing processes for remanufactured goods and medical devices, which hinder American companies from accessing the Indian market. The report also highlights India’s restrictive policies on dairy imports, where compliance requires complex animal feed certifications that create significant barriers for U.S. exports.
In terms of government procurement, the USTR pointed out that India favors domestic suppliers and lacks a comprehensive procurement policy, thereby disadvantaging foreign firms. Such policies purportedly aim to bolster local manufacturing, a stance supported by the Indian government despite calls for reform.
Moreover, India’s defense offset policy mandates that a sizable portion of defense contracts must be invested back into domestic industries, which restricts opportunities for U.S. manufacturers. Ajay Srivastava, a former trade ministry official, noted that while the U.S. may push for changes beneficial to its interests, India must consider any adjustments in alignment with its own national priorities and social values, emphasizing that reform should be equitable and cognizant of India’s sovereignty.
The recent USTR report underscores substantial trade barriers posed by India’s high tariffs and regulatory practices, complicating the ongoing negotiation for a bilateral trade agreement with the U.S. As the U.S. implements reciprocal tariffs, India faces pressure to reevaluate its trade policies. Engagement between the two nations must consider mutual interests, ensuring that respect for national priorities and sovereignty is prioritized.
Original Source: www.business-standard.com
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