Experts see limited immediate impact of US tariff under Sec 301 on India, stress export diversification for long-term gains
Ahmedabad, July 24
The 10 per cent US tariff under Section 301 on Indian goods is expected to have only a limited immediate impact on exports, economists said. They added that India should focus on expanding export markets and strengthening long-term trade ties with the United States.
Speaking with ANI, economist Sunil R. Parekh said keeping Indian under 10% tariff is "a good step" that reflects India's ability to present its case effectively before the US administration, and added that the immediate economic impact would be marginal.
"In my opinion, the difference in tariff between 12.5 per cent to 10 per cent is of marginal significance. It's a good step. I think it shows that we have been able to negotiate and present India in the correct light to them," Parekh said.
While different sectors may be affected differently depending on labour-intensive production and future regulatory developments, he said the short-term impact would remain limited.
Calling allegations of forced labour against Indian exporters "absolutely baseless", Parekh said Indian labour laws are stringent and exporters have already presented detailed data to the US authorities. Looking ahead, he said export diversification would be the best strategy to reduce dependence on policy changes in any one market.
"The best way to mitigate against US fluctuation is to diversify exports," he said.
Echoing similar views, Vishwanath Pingali, Professor at the Indian Institute of Management (IIM) Ahmedabad, said the 10 per cent tariff provides much-needed certainty after months of changing tariff proposals and places India among countries facing the lowest tariff rates under the latest US action.
"I think this 10 per cent may come as a closure... settling at the best tariff rate that the US has imposed on any country, I think this is a good thing," Pingali told ANI.
He said the reduction could benefit sectors where India faces intense global competition, such as textiles, while its impact on other sectors may be limited. He added that continued investment in technology, government initiatives to boost manufacturing, and diversification into new export markets would be key to strengthening India's competitiveness and reducing exposure to future tariff uncertainty.
Overall, both experts said the latest tariff decision signals improving India-US trade engagement, while emphasising that long-term gains will depend on expanding export destinations, improving competitiveness and sustaining dialogue between the two countries.
— ANI
Reader Comments
Finally some clarity! The uncertainty was killing SMEs. But I worry about the forced labour allegations - we need to ensure our labour practices are above board. Good that our exporters presented data. Now let's diversify into Africa and ASEAN too.
I agree with diversification, but it's easier said than done. Building new supply chains takes years. Meanwhile, our textile exporters are stuck with 10% while Vietnam gets lower rates. Need more proactive trade diplomacy, not just reacting after tariffs are announced.
10% is better than the earlier 25% threats, but let's not celebrate too much. The real challenge is non-tariff barriers - US FDA audits on pharma, Section 301 on digital services, etc. Diversification is crucial, but we also need bilateral investment treaty with US.
I work in textile exports - this is a relief yes, but the industry needs more support from govt. Power costs, compliance costs, port delays - these eat into our competitiveness. Even at 10% tariff, we struggle against Bangladesh. Need to fix domestic issues first.
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