It analyzes potential impact of U.S. Reciprocal Tariff Plan and proposes actions for Indian government and industry stakeholders to mitigate losses.
- U.S. Reciprocal Tariff Plan aims to counter trade imbalances by imposing higher tariffs on countries with which the U.S. runs a trade deficit.
Impact of US Reciprocal Tariff Plan
- On India: Indian exports could face an additional tariff of 4.9% compared to the current 2.8%.
- Sector-Level Impact:
- Agriculture: Farm exports would be hit hardest, with shrimp, dairy, and processed foods facing tariffs of up to 38.2%.
- Industrial Goods: Major risks would be on Pharmaceuticals, diamonds & jewelry, and electronics exports.
- E.g. Tariff differential on pharmaceutical sector to the tune of 10.90% may increase costs for generic medicines impacting demand and reducing competitiveness
- Minimal Impact: Petroleum, minerals, and garments may be unaffected.
Recommendations
- Make an advance tariff offer to the US, drop FTA plan:
- India should propose a zero-for-zero strategy by identifying tariff lines where India can eliminate tariffs for U.S. imports without harming domestic industries
- Adoption of Retaliatory Measures: India should refuse unfair concessions and consider countermeasures, similar to China’s response.
- Reconcile large gap in the trade data as reported by India and the US: to prevent tariff decisions based on inaccurate numbers.
