The US has implemented new tariffs on Indian goods, asserting unequal tariff treatment. President Trump emphasizes trade imbalances, with India’s tariffs being notably higher. India’s Ministry of Commerce is actively assessing impacts, offering tariff concessions on American goods. Despite tariff concerns, experts project minimal short-term GDP impact, highlighting sectors like textiles and agriculture that may benefit. Overall, India’s strategic positioning could mitigate adverse effects.

Recently implemented tariffs by the United States have sparked concern in India amid ongoing geopolitical and market uncertainties. President Trump has publicly emphasized the unequal tariff treatment between the US and India, stating that while the US levies minimal charges on Indian goods, India imposes significantly higher tariffs of 52 percent.

The new tariff strategy comprises a two-tiered approach, introducing a baseline tariff of 10% on all US imports effective from April 5, in response to a national emergency predicated on security concerns linked to trade deficits. Subsequently, beginning April 9, enhanced tariffs targeting specific countries, including India, will come into play.

In response to these anticipated changes, India’s Ministry of Commerce and Industry has proactively engaged with local industries to evaluate possible impacts of the tariffs. Reports indicate that discussions have centered on addressing existing tariff discrepancies and non-tariff barriers that have hindered Indian exports to the US.

Moreover, India has indicated a willingness to reduce tariffs on more than 50% of American goods valued at $23 billion, a significant diplomatic move reflecting its readiness to enhance trade relations. Notably, the bilateral trade between India and the US reached $124 billion in 2024, with India maintaining a trade surplus.

The PHD Chamber of Commerce and Industry has assessed the immediate impact of these tariffs on India’s GDP, estimating an insignificant short-term effect of only 0.1%. Hemant Jain, PHDCCI President, asserted that India’s robust domestic manufacturing and supportive governmental initiatives would facilitate economic resilience during this challenging period.

Sanjay Nayar, President of ASSOCHAM, highlighted that India’s economy remains less vulnerable compared to other Asian nations due to its inward-focused approach.

In terms of sectoral impacts, the India Electronics and Semiconductor Association (IESA) welcomed semiconductor exemptions from the new tariffs, though acknowledged the significant concern posed by the duties on India’s exports.

While China faces steep tariffs of up to 79% on electronics and Vietnam experiences a 46% increase, India enjoys relatively lower rates, enhancing its comparative market position. Additionally, the textile and agricultural sectors, particularly shrimp exports, are expected to benefit, as US buyers may shift their sourcing from countries like Vietnam, Bangladesh, and China to India.

Overall, despite the introduction of these tariffs, thanks to its strategic positioning and active trade diplomacy, India is positioned to endure these changes without catastrophic disruptions. A senior government official remarked on the mixed outcomes, emphasizing that it should not be viewed as a significant setback.

The introduction of new tariffs by the United States on Indian goods poses challenges and opportunities for India. While the tariffs may lead to modest short-term GDP impact, India’s strategic initiatives and diversified manufacturing capabilities could allow it to minimize adverse effects. Furthermore, certain sectors like textiles and agriculture may benefit from competitive positioning in the evolving global market. India’s proactive diplomatic approach and strong domestic manufacturing provide a foundation for navigating the complexities introduced by these tariffs.

Original Source: m.economictimes.com

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