US Tariffs on Indian Exports
The United States, under current leadership, has imposed a 25% tariff on Indian exports. However, this rate might change depending on future negotiations and circumstances.
- Potential Changes in Tariff Rates:
- The tariff could be higher if linked to India's purchases of Russian oil.
- Negotiations might lower the tariff if a broader deal is reached.
- Exceptions to the Tariff:
- Specific goods, like mobile phone handsets, have different rates.
- The US aims to minimize the inflationary impact of tariffs.
Comparative Tariff Rates
India faces a higher tariff rate compared to other nations:
- Developed countries like Japan, Korea, and the EU have 15% tariffs.
- Developing countries such as Bangladesh and Vietnam face 19-20% tariffs.
- The additional 5 percentage points could significantly hinder Indian exports.
India's Trade and Economic Strategy
India must engage effectively with the US to negotiate better terms, without compromising broader economic interests.
- Imperatives for the Indian Economy:
- Enhancement of productivity and competitiveness is crucial for sustainable economic growth.
- There is a need to overcome pessimism regarding competitiveness levels compared to Northeast and Southeast Asia.
- Trade Openness:
- Greater openness and competitive discipline are necessary for improvement.
International Trade Engagement
- India should pursue broad agreements with the US.
- Concluding a free-trade agreement with the European Union is crucial.
- Consideration of joining large trade blocs like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is vital.
- Indian diplomacy must maintain a positive approach to trade negotiations to avoid worsening the scenario.
