Trump’s 10% tariff blow that could work in India’s favour
FIEO President SC Ralhan said that the impact of the tariff should not be evaluated only on the headline rate, but should also be evaluated by comparing it with the tax practices faced by rival exporting countries.
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“While many rival exporting countries, including China, Vietnam, Thailand, Turkey, UAE, Brazil, South Africa and others, face a higher tariff of 12.5%, the fact that India has been placed in the lower tariff category of 10% reflects US recognition of the policy measures taken by the Government of India to strengthen its framework on forced labour. This has helped India achieve a relatively advantageous position compared to many of its global competitors,” Ralhan said. he said.
According to FIEO, the tariff may increase the cost of importing Indian goods in the US market, but India’s exporters in labor-intensive sectors such as textiles, garments, leather and footwear will remain competitive as many rival suppliers, including Bangladesh, Cambodia, Pakistan, Sri Lanka, Indonesia and Malaysia, are also subject to the same 10% tariff.
The exporters body said Indian companies could also benefit from possible trade diversions in segments where rival countries face higher tariffs of 12.5%.
“More importantly, Indian exporters can benefit from trade diversion in various product segments where rival countries are subject to a higher 12.5% tariff. Even a 2.5% difference can impact sourcing decisions, especially in highly competitive markets where Indian exporters can offer quality products, reliable deliveries and stable supply chains,” Ralhan said. he added.Also Read: Donald Trump finds new way to impose tariffs but Asia won’t admit why
FIEO said the US tariff measure is not a finding against Indian exporters or Indian products, but is part of broader country-level policy covering various economies.
It added that many key product categories, including steel, aluminum, auto components, pharmaceuticals, pharmaceutical ingredients and some agricultural products currently covered under Section 232 measures, continue to be exempt, reducing the impact on some export sectors.
Ralhan said the government’s policy measures and its relations with the US have helped India achieve a relatively advantageous tariff position compared to many of its trading partners.
“The government’s timely policy interventions and constant interaction with the US have helped India achieve a relatively competitive tariff position against many of its key trade rivals. Going forward, sustained bilateral dialogue will be equally important to secure broader product exclusions, seek comparable treatment with other partner countries, ensure India’s inclusion in any textile tariff rate quota mechanism and work for early tariff review,” he said.
FIEO recommended exporters evaluate the impact of the tariff on a product-by-product basis, taking into account applicable U.S. duties, available exemptions, and competing suppliers’ tariff practices.
The organization also urged exporters to focus on supply chain compliance, productivity improvements, quality, innovation and value-added to strengthen their position in the US market.
“Indian exporters have repeatedly demonstrated resilience in overcoming global disruptions. While the new tariff presents challenges, it also presents opportunities for India to expand its presence in sectors where rival countries now face relatively higher tariffs. With proactive industry response and ongoing Government support, Indian exports remain well positioned to continue their growth in the US market,” Ralhan added.
