NEW DELHI (AP) – India is taking a sharp blow to overseas trade as US tariffs are in effect on the range of Indian products on Wednesday. This threatens half of India’s exports to its largest market and highlights the vulnerable trade ties between the two countries.
President Donald Trump initially announced a 25% tariff on Indian goods. But earlier this month he signed an executive order imposed. Additional 25% tariff By purchasing in India Russian oilbrings total tariffs imposed by the US That ally Up to 50%.
The Indian government estimates that tariffs will affect exports worth $48.2 billion. Authorities warn that the new obligations are commercially unfeasible and could lead to unemployment and slowing economic growth.
Trade ties between India and the US have grown in recent years, but remain vulnerable to conflicts over market access and domestic political pressure. India is one of the fastest growing of the major global economy and could face a slowdown as a result.
Sectors affected by US tariffs
Estimates from the Global Trade Research Initiative, a New Delhi-based think tank, suggest that labor-intensive sectors such as textiles, gems, gems, leather goods, food and automobiles will be hit hardest.
“The new tariff regime is a strategic shock that threatens to wipe out India’s long-standing presence in the US, causing unemployment in export-led hubs and weakens its role in the industrial value chain.”
For now, the US has exempt some sectors, such as medicines and electronic goods from additional tariffs, and is bringing some relief to India as exposure in these sectors is important.
Exporters fear loss
Puran Dawar, a leather shoe exporter in Agra city in northern India, says that the industry will be hit hard in the short term unless domestic demand is strengthened and other overseas markets buy Indian goods.
“This is an absolute shock,” said Dowar, whose business with the US has grown in recent years. Dawar’s clients include Zara, a leading fashion retailer.
Dawar, the regional chairman of the Leather Export Council, also said he is an export promotion group.
A group representing exporters warns that new import duties could hurt Indian small businesses, which are heavily dependent on the US market.
“This is a difficult situation. Some product lines will simply become unfeasible overnight,” said Ajaysahai, Director of India’s Export Machines Association.
Modi vows not to put pressure on us
This tariff comes as the US administration continues to seek greater access to India’s agriculture and dairy sector.
India and the US have negotiated five rounds for a bilateral trade agreement, but have yet to reach a deal. This is mainly because New Delhi resisted opening these sectors to cheaper American imports.
Prime Minister Narendra Modi vowed not to succumb to pressure.
“For me, the interest in farmers, small businesses and dairy products is at the top. My government ensures they are not affected,” Modi said at a rally in Gujarat this week.
He said the world is witnessing “the politics of economic selfishness.”
The US delegation has cancelled plans to visit New Delhi this week for sixth round of trade talks.
India is planning local reforms to ease the blow from tariffs
The government has begun working on reforms to promote local consumption and isolate the economy.
Prior to the major Hindu festival in Diuwali in October, the goods and services tax or sales tax has now been changed to reduce costs for insurance, automobiles and appliances.
The government council will hold a meeting early next month to decide on tax cuts.
The Ministry of Trade and Treasury discusses financial incentives, including advantageous bank loan fees for exporters.
The Ministry of Trade is also considering steps to expand exports to other regions, particularly Latin America, Africa and Southeast Asia. Trade negotiations with the European Union could gain new urgency as India works to reduce its dependence on the US market.
___
Associated Press video journalist Rishi Lekhi contributed to this report.
