New Delhi: India has begun a detailed sector-wise analysis, drawing up multiple scenarios, to prepare for a possible increase in tariffs on product exports to the United States under the Donald Trump administration, multiple people familiar with the matter told ET.
“Ministries and departments are examining various scenarios, apprehending such a move by the US and possible remedies,” one of the persons said.
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President-elect Trump on Tuesday had said the US will impose reciprocal tariffs on Indian goods because New Delhi imposes high tariffs on American goods. Independent experts said India could relook at import duty on specific products and enhance market access for certain imports from the US to address Trump’s concerns.The US has in the past raised issues on high import duty on Harley Davidson and limited market access to medical devices and equipment as well as its dairy products into India.
Addressing US Concerns
Officials maintain that India’s most favoured nation (MFN)-weighted average import tariff is quite low at about 5-6%. Select agricultural products faced higher tariffs, but even those are much lower than the rates bound at the World Trade Organization (WTO).
Most countries, including the US, apply high tariffs as well as several non-tariff barriers on agri goods, they said. For example, dairy products, fruits and vegetables, cereals and food preparations, and oils face tariffs as high as 130- 190% in the US.
Another person said any firm assessment of impact or measures needed can be made only after a concrete announcement by the Trump administration, which will take charge on January 20.
Experts said New Delhi also has the option of imposing retaliatory tariffs or approaching the WTO even as they suggested a strategic approach.
“There is no harm in relooking at some of the products on which India can tweak tariffs to address the concerns of the US,” said one of the experts who did not wish to be identified due to the sensitivity of the matter.
While tariffs are WTO-bound or linked to MFN status between nations and not country-specific, there is a view that a calibrated approach can be adopted when looking at the list of products traded between India and the US.“It is not possible for India to have country specific tariffs because it violates most-favoured nation (MFN) principle,” said Ajay Sahai, director general of Federation of Indian Export Organisations (FIEO).
Tariff review
Sahai is of the view that India can relook at some of the tariff lines and strategise accordingly even if it means a marginal duty loss to the nation on some of the products.
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