Impact of the US's Tariffs on Indian Exports
With the introduction of new tariffs by the US, Indian exporters face varying challenges depending on the category of goods they export. The impact of these tariffs can be categorised into three distinct segments:
1. Exempted Export Items
- Includes pharmaceuticals, smartphones, and refined petroleum.
- Exempt from the 50% import duty due to US domestic needs, such as affordable generic drugs and Apple's global manufacturing strategy to maintain low iPhone prices.
- India is less likely to be singled out for tariff actions in this category.
2. Items with the US as Sole Market
- Includes solar modules, linen, and shrimps.
- These exporters face challenges as the US is the primary buyer, making it difficult to find alternative markets.
3. Diversifiable Export Items
- Includes items where the US is one of several destinations.
- These exporters can find alternative markets more easily, requiring less assistance but still needing policy support.
Policy Implications and Strategic Opportunities
- Policy support should be tailored, focusing more on exporters with limited market alternatives.
- Opportunity to reduce export concentration by diversifying trade partners, enhancing resilience.
- While the US is a significant market, other major destinations like the UAE and the Netherlands act as regional entry points.
- A weakened rupee, in response to US tariffs, may provide some relief by making Indian goods more competitive.
In conclusion, with thoughtful policy crafting, India can mitigate the impact of US tariffs, leveraging wide exemptions, and strategic diversification of its export markets.