U.S. tariffs threaten Indian trade as President Trump highlights discrepancies during a congressional address. India must develop a strategic response by the April 2 deadline, with talks initiated by Commerce Minister Piyush Goyal in Washington. The two nations aim for a trade agreement by year-end, targeting $500 billion in annual trade by 2030. India’s export sectors face formidable challenges amid tariff disparities and labor law concerns.
The United States recently issued a tariff threat that affects India, alongside other nations like the European Union, China, and Canada, during President Trump’s address to Congress. The April 2 deadline necessitates that India develop a strategy swiftly. Piyush Goyal, the Indian Commerce and Industry Minister, is travelling to Washington to address complex trade matters and initiate discussions on a proposed Bilateral Trade Agreement.
Negotiations between the United States and India aim to establish a trade deal by year-end, with a commitment to reach $500 billion in annual trade by 2030, as discussed during Prime Minister Modi’s recent US visit. Trump emphasized in his address that the U.S. has been subjected to higher tariffs from other countries for decades and claims it is time for reciprocity.
India is currently monitoring US tariff actions with optimism for advancing trade discussions. The Commerce Ministry has begun stakeholder consultations to evaluate the implications of potential U.S. tariff increases and is examining the opportunity to adjust its own tariffs on sectors of significant Indian interest. An official expressed hope that an agreement would minimize the impact of any reciprocal tariffs.
Trade experts suggest that India might propose removing tariffs on a majority of industrial goods imported from the United States, contingent upon equivalent concessions from the U.S. Additionally, India could offer tariff lines where it permits duty-free imports through existing Free Trade Agreements (FTAs), excluding agriculture from concessions. Ajay Srivastava of Global Trade Research Initiative advised India to present this proposal before the U.S. makes any tariff decisions.
Various American products, including motorcycles and agricultural goods, face high tariffs in India, despite recent reductions in certain areas. The average tariff on American products is considerably lower compared to Indian exports, but gaps in tariff rates exist and may lead to pressure for tariff reduction by the U.S.
The U.S. remains India’s largest trading partner, with significant trade figures reported for FY24. However, trade analysts caution that U.S. tariff modifications might extend beyond mere tariff adjustments to include non-tariff barriers and local taxation. Such changes could severely impact Indian exports, diminishing their competitiveness.
Apart from tariff issues, India is evaluating the implications of the U.S. Trafficking Victims Protection Reauthorization Act on its exports. The U.S. has raised concerns regarding child labor in India’s textile industry, threatening to limit imports from sectors that allegedly use such labor. Continued government support in export credit and technology is deemed essential for Indian exporters to maintain competitiveness in the international market.
In conclusion, India faces a pressing situation as the U.S. imposes tariff threats, compelling the nation to swiftly formulate a strategic response. The forthcoming negotiations aim to benefit both parties through a potential bilateral trade agreement. However, India’s export sectors must navigate a complex landscape marked by significant tariff disparities and concerns surrounding labor practices. The effectiveness of India’s strategy will be critical in mitigating the risks associated with increased U.S. tariffs, thereby preserving its position as a strong trading partner.
Original Source: m.economictimes.com
