US President Donald Trump has now indicated to take a tough economic step against India as well. Trump has said that the US can consider imposing a tariff (import duty) of 20 to 25 percent on goods imported from India. Trump's statement has come at a time when the sixth round of talks is going to be held between India and the US regarding the trade deal. If this tariff is implemented, then it can have a direct impact on many major export sectors of India including major industries like clothing, shoes, jewelry, mobile and electronics.
Textile and garment industry to be most affected
India is the largest exporter of textiles and footwear to America. The demand for Indian clothes and shoes is very high in American retail markets. But if a tariff of 20 to 25 percent is imposed on them, then their prices will increase significantly in America. This will not only lead to a decline in demand, but shipments and trade from India to America may also be affected.
Electronics and mobile exports also in danger
India exports mobiles, telecom products and electronics goods worth about $ 14 billion to America every year. When the tariff is implemented, the price of these products will increase in America adversely affecting their demand. This will have a direct impact on India's exports, as customers can gradually turn towards other competitive countries.
Effect on chemicals and chemical industry too
Segments like chemicals and industrial raw materials can also come under the grip of this tariff policy. Although there is no clear situation on this yet, but experts believe that in case of tariff imposition, their exports can also decrease.
Which sectors can get relief?
There are some sectors which America can keep free from tariff. These include products like pharmaceuticals, semiconductors, energy products (oil, gas, coal, LNG) and copper. All these are important for the needs of America and disruption of their supply can be harmful for America as well.
Which sectors are exempted from tariff?
If the tariff is implemented, then there are some sectors of India which America will keep away from tariff. These include pharmaceuticals (medicines), semiconductors, energy products (oil, gas, coal, LNG) and copper etc. Because these things are very important for America, due to which it will never want to impose tariff on them.
What will India do?
1. Will challenge the tariff
India can also register an objection in the World Trade Organization (WTO) and argue that this tariff is against the rules of trade. The purpose of WTO is that no country should harm other countries by taking unilateral decisions.
2. Solution through dialogue
In the trade deal talks going on between India and America, India will try to convince the Trump administration that these tariffs will also harm the consumers of America, because Indian goods will become expensive.
3. Offer discounts and facilities in return
India can satisfy America by giving some concessions in the field of services, such as IT and pharma, so that heavy tariffs are not imposed on textile, jewellery, mobile and auto sectors.
(Prakash Kumar Pandey)