TARIFFS AND INDIA: GTRI REPORT

GS3 ECONOMICS: 

The Global Trade Research Initiative (GTRI) has published a report titled Tariffs and India, which evaluates the potential effects of the U.S. Reciprocal Tariff Plan and suggests strategies for the Indian government and industry to minimize losses. The U.S. Reciprocal Tariff Plan seeks to address trade imbalances by applying higher tariffs on nations where the U.S. experiences a trade deficit.

Effects of the U.S. Reciprocal Tariff Plan

On India: Indian exports might face an additional tariff of 4.9%, compared to the existing 2.8%.
Sector-Specific Impacts:

• Agriculture: Agricultural exports, particularly shrimp, dairy, and processed foods, would be most affected, potentially facing tariffs as high as 38.2%.
• Industrial Goods: Key sectors like pharmaceuticals, diamonds and jewelry, and electronics exports would face significant challenges.
  • For instance, a tariff difference of 10.90% on pharmaceuticals could raise costs for generic drugs, lowering demand and competitiveness.
• Minimal Impact Areas: Exports like petroleum, minerals, and garments are likely to remain largely unaffected.

Recommendations

• Propose an Early Tariff Deal with the U.S. and Abandon FTA Plans: India should offer a “zero-for-zero” approach, pinpointing tariff lines where it can eliminate duties on U.S. imports without damaging local industries.
• Implement Retaliatory Actions: India should resist unfair demands and explore countermeasures, akin to China’s approach.
• Address Trade Data Discrepancies: India and the U.S. should align their trade statistics to ensure tariffs aren’t based on flawed figures.