Trump’s country-specific tariffs, varying from 10% to 54% �?India’s been slapped with a 27% rate �?can push investments in countries with lower tariff disadvantage. This may lead to the emergence of new manufacturing locations for prepared countries. India will need specific internal reforms to benefit. Will it step up?

But why’s the tariff rate for India on the lower side? | In 2024, India exported over $80bn worth of goods to US, with a trade surplus of $36.4bn. To India’s worried business people, a 27% country-specific tariff on India is steep but appears moderate compared to Vietnam’s 46% and China’s 54%.

Was India given softer treatment? No one knows. But note that since Trump took office in Jan, India has made several policy decisions to help US companies.

These include cutting import taxes on bourbon whiskey, fish feed, motorcycles, satellite parts and mobile phone components. India also removed a 6% digital tax on revenue earned from Indian users, benefitting US firms like Google, Meta and Amazon. It is working on changing its nuclear liability law so US companies can supply nuclear equipment without fear of legal risk.

India may soon allow Elon Musk’s Starlink to offer satellite internet through local partners like Reliance Jio and Bharti Airtel.

What is the impact of the new tariff on India’s exports? | Trump’s sweeping tariff action creates mixed outcomes for Indian exports. India may gain a relative advantage in select sectors, but gains won’t be automatic. Total tariff charged from April 9 will be a sum of the existing US tariffs and new country-specific tariffs.

Textiles and garments are well-positioned to benefit, as US tariffs reduce competitiveness of rivals like China and Bangladesh. However, India must reform labour laws and enable large-scale production to fully capitalise on this opening.

In electronics and telecom, steep tariffs on Vietnam and Thailand create space for India, but limited domestic value addition and high component imports dilute competitiveness. Tariff exemptions on 28 mobile components in the latest budget may further weaken the domestic ecosystem.

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