Trump’s 50% tariff has come into effect since August 27, affecting goods exported to the US. In its aftermath, the government is looking for numerous ways to reduce its effect on the Indian Economy. Certainly, Trump’s 50% tariff will affect $ 48.2 billion worth of export merchandise to America. The US has already implemented a 25% reciprocal tariff on Indian imports on August 7. In addition, a 25% extra duty has come into effect from August 27, since India is importing Russian oil.
Trump tariff to hit India’s sensitive sectors
Particularly, Labour-intensive industries are vulnerable with exports of Textiles, shrimp, leather and gem jewellery expected to face critical impacts. However, the duty exemptions stay for Pharmaceuticals, electronics and petroleum products.
Shockingly, Production has stalled in textile and apparel manufacturing units across Tiruppur, Noida and Surat, as manufacturers are grappling to compete with more cost-effective competitors from Vietnam and Bangladesh
Furthermore, the seafood industry, especially shrimp farming, is battling with hurdles such as potential inventory losses, supply chain interruptions and agricultural distress, considering that the US market is responsible for approximately 40% of India’s seafood exports.
Is the Centre devising a powerful strategy to protect the economy?
Discussions at a higher level are being held, as officials have stated that no strict action will be taken in response. However, one of the officials has informed that the Export Promotion Mission and various other proposals, such as SEZ amendments, are under consideration.
Interestingly, the commerce and industry ministry has developed a Rs 25,000-crore Export Promotion Mission to protect the exporters. This initiative comprises of trade finance, regulatory aspects, standards implementation, market accessibility, Brand India enhancement, e-commerce facilities, warehousing solutions and trade facilitation measures.
Besides this, Union Commerce and Industry Minister Piyush Goyal stressed that whilst India’s relationship with the US remains significant, India’s decisions are prioritised solely by national interests. He cited that India maintains separate approaches towards trade and geopolitical issues.
He said that the ministry and different line ministries are already looking at the complementarity of our strength areas with several other economies, so we can look at expanding trade with other countries. There are various ways in which we can ameliorate this present situation until we can come to a settlement. Furthermore, Goyal added that the officials are considering modifications to the GST structure. Additionally, support will be given to domestic sectors, including food processing and textiles, through GST adjustments to improve internal demand.