Tariff Exemption for India Could Boost Indo-US Trade Efforts
Exporters argue that US tariff exemption for India will enhance bilateral trade. President Trump’s upcoming tariffs may hinder shipments to the US. The FIEO calls for India’s exemption to facilitate trade growth. Strategic negotiations on a bilateral agreement are currently underway, targeting completion by 2025.
Exporters believe that exempting India from the US reciprocal tariffs is crucial for enhancing bilateral trade. Any tariffs on Indian goods would negatively impact shipments to the US, they contended. Recently, President Donald Trump indicated that while automobile tariffs are forthcoming, some nations may receive exemptions starting April 2.
The Federation of Indian Export Organisations (FIEO) asserts that India deserves a waiver from these tariffs due to its collaborative engagement with the US on multiple fronts and in pursuit of a bilateral trade agreement. FIEO Director General Ajay Sahai highlighted that the goal of increasing bilateral trade from approximately USD 200 billion to USD 500 billion necessitates a significant support mechanism that the exemption would provide.
An exporter noted that granting exemption to India would eliminate tariff uncertainties, thereby bolstering exports to the US. The US has already placed high tariffs on China, yet think tank GTRI predicts that an exemption for India is improbable, given Trump’s narrative of India as a high-tariff nation. GTRI’s Founder, Ajay Srivastava, warned that any exemption would likely demand major concessions from India on various issues beyond trade.
India has begun to remove the equalization levy on major tech firms, including Google, and Srivastava advised India to be steadfast and not compromise on strategic matters. He stated, “If Trump imposes tariffs, so be it. The whole world is watching India. Trump tariffs are driven more by whims than principles and are unsustainable.”
Senior officials from India and the US have initiated discussions on the potential bilateral trade agreement, with Brenda Lynch from the US leading talks with India’s Additional Secretary in Commerce, Rajesh Agrawal. The objective is to finalize the agreement’s first phase by fall 2025.
The US is requesting greater market access in sectors such as industrial goods, automobiles, wines, petrochemicals, and select agriculture products, while India may propose duty reductions in labor-intensive sectors, including textiles. Trump’s reciprocal tariffs slated for April 2 target several nations, including India, which he has previously criticized for high tariffs.
In 2024, India’s main exports to the US included drug formulations, telecom instruments, precious stones, and ready-made garments, among others. Conversely, India’s imports primarily featured crude oil, petroleum products, and electric machinery.
In summary, exempting India from US reciprocal tariffs is viewed as essential for facilitating a more seamless bilateral trade relationship. The Federation of Indian Export Organisations advocates for this waiver, emphasizing the necessity for strategic trade negotiations. Despite the potential for tariff imposition by the US and the complexities involved, discussions for a bilateral trade agreement are ongoing with an aim for completion by 2025. Exporters are hopeful that exemptions will lead to increased trade opportunities.
Original Source: www.business-standard.com
