Potential Impact of U.S. Tariffs on India’s Export Sectors
U.S. reciprocal tariffs may severely impact India’s sectors such as agriculture, machinery, and pharmaceuticals, driven by notable tariff differentials. Critics warn that this could undermine Indian exports and market competitiveness while potentially increasing prices for U.S. consumers.
Experts have indicated that U.S. reciprocal tariffs may significantly affect various sectors in India, particularly agriculture, machinery, pharmaceuticals, electricals, and chemicals. These potential tariffs arise from the notable differences in tariff rates between the U.S. and India, which have rendered certain Indian exports less competitive in the American market. Different sectors exhibit varying tariff gaps, influencing the degree of impact on each sector.
The analysis conducted by the Global Trade Research Initiative (GTRI) reveals substantial tariff gaps. For instance, the pharmaceutical sector faces an 8.6% tariff differential, while agriculture experiences an alarming 24.99% gap on processed food and related products. Specific items, such as shrimp, stand to lose significant market competitiveness due to a 27.83% differential.
Fish and meat exports are among the most vulnerable, with shrimp accounting for a considerable portion of India’s seafood exports to the U.S. Concerns have been raised regarding the competitiveness of these products due to pre-existing duties in addition to the anticipated new tariffs. Should tariffs be enacted, Indian exporters may experience relief if equivalent tariffs are imposed on competitor nations like Ecuador and Indonesia.
Other affected sectors include dairy products, which could suffer a 38.23% tariff for exports valued at approximately $181.49 million. Additionally, edible oils, alcohol, and live animal products are also listed as potentially impacted due to significant tariff gaps. In contrast, it appears that tobacco products may remain unaffected due to already high U.S. tariffs.
Industrial goods are also likely to be adversely impacted by higher American duties, particularly in pharmaceuticals and electronics. The GTRI estimates that the pharmaceutical sector, India’s leading exporter, may confront a 10.90% tariff differential, raising costs associated with generic and specialty medications. Similarly, the jewellery sector, which includes diamonds and gold, may experience a 13.32% tariff hike, further straining competitiveness.
A variety of other industrial sectors, including machinery, electronics, and chemicals, are also projected to face tariff increases, resulting in inflated prices and decreased demand for Indian goods. Suggestions have been made that reciprocal tariffs will not necessarily equate to tariff differentials alone, but may also consider other barriers.
As the U.S. prepares to unveil these tariffs, stakeholders remain uncertain about the long-term implications, while expressing concern over the potential burden that such tariffs might place on American consumers as well.
In conclusion, if implemented, the U.S. reciprocal tariffs may pose significant challenges for India’s agricultural and industrial sectors due to various tariff differentials. Key areas of concern include seafood, pharmaceuticals, and electronics, each facing potential tariff hikes that could inhibit competitiveness in the U.S. market. The overall impact may not only disrupt Indian exports but also affect U.S. consumers due to higher prices.
Original Source: www.thehindu.com
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