India a winner in tariff war
NEW DELHI : India has emerged as a winner in the escalating global tariff war unleashed by the US, with lower duties than its competitors, a senior official said Saturday. India also has an early-mover advantage as it has already initiated discussions on the Bilateral Trade Agreement (BTA) that will give a chance to bring down duties on Indian exports to the US down from the current levels, the official added.
The reciprocal tariffs and retaliation by China have created even more space for products like electronics, engineering goods and textiles where India and China compete directly in the US market, the official added.
While the US has imposed additional 26% duties on Indian imports under the reciprocal tariff plan, the tariffs on China are 34%, Vietnam 46%, Bangladesh 37%, Sri Lanka 40% and Thailand 36%.
India is the only country with which the US is deeply engaged in trade negotiations. Among all trading partners, it is only India to which the US has sent a delegation of trade negotiators.
The government will be reaching to exporters and export promotion councils for their view and issues they might face. “Some exporters have said they see no impact of the reciprocal tariffs; for some others the government may offer support,” said the official.
One of the products where the hit is seen is shrimps, as competitor country Ecuador has got 10% reciprocal tariffs. India’s quality control orders will enable faster clearance of marine exports in the European Union so a new important market will open up, the official said. OCOs on domestic shrimp growing and processing have improved standards of the local industry.
To deal with this blow, the quality clearance to enable marine exports to the European Union has been speeded up so a new important market will open up for the sector. Shrimp exports to the US total around $2.4 billion.
As the world looks for ways to cut their losses from the Trump tariffs, India has been flooded with requests for FTAs. India Is already negotiating seven FTAs. The official said talks with the UK on FTA are progressing very well. The deadline for FTA with EU is 2025- end and for BTA with US the conclusion of first tranche will come by this fall.
Some quarters have expressed concerns that there might be a dumping of products in India as major trade partners of US face high tariffs. The official said these will be dealt with using existing legal provisions of anti-dumping and other safeguard measures. Because of high tariffs there might be some demand compression but it wouldn’t be much because the difference between import price and retail sale price in the US is big, so some of the tariff hikes may be absorbed by the trade. Trump has also promised tax cuts and decline in prices of energy with a fall in prices of crude will leave more money in the hands of consumers.
The official said while goods exports in 2024-25 are expected to remain flat at around $437 billion last year but will rebound sharply in 2025-26, he added.