New US tariff unlikely to dent India's export competitiveness: Exporters' body
New Delhi, July 24
The additional 10 per cent Section 301 tariff imposed by the US on imports from India is unlikely to significantly affect the country's export competitiveness, as many rival exporting nations have been subjected to comparable or higher tariff rates, apex exporters' body Federation of Indian Export Organisations said on Friday.
The new tariff would increase the landed cost of Indian products in the US market, its overall impact should be viewed in the context of the tariff treatment accorded to competing supplier countries rather than in isolation, according to FIEO President S.C. Ralhan.
"India has not been singled out under the new US measure. The fact that India has been placed in the lower 10 per cent tariff category, while several competing exporting nations, including China, Vietnam, Thailand, Türkiye, the UAE, Brazil and South Africa, face a higher tariff of 12.5 per cent, reflects the recognition by the US of the policy measures taken by the Government of India to strengthen its framework relating to forced labour," Ralhan said.
He added that India's direct competitors in labour-intensive sectors such as textiles, garments, leather and footwear -- including Bangladesh, Cambodia, Pakistan, Sri Lanka, Indonesia and Malaysia -- have also been subjected to the same 10 per cent tariff.
"As a result, Indian exporters largely retain their relative competitiveness in these sectors, as competing suppliers will face a similar duty incidence in the US market," he said.
Ralhan also said Indian exporters could benefit from trade diversion in product segments where rival exporting countries are subject to the higher 12.5 per cent tariff.
"Even a differential of 2.5 per cent can influence sourcing decisions in highly competitive markets, particularly where Indian exporters are able to offer quality products, reliable deliveries and stable supply chains," he noted.
FIEO emphasised that the US measure is part of a broader country-level policy applicable to several economies and should not be interpreted as a finding against Indian exporters or products.
It also pointed out that several key product categories, including steel, aluminium, auto components, pharmaceuticals, pharmaceutical ingredients and certain agricultural products already covered under Section 232 measures, continue to enjoy exclusions, limiting the impact on a number of export sectors.
The exporters' body credited the government for strengthening India's legal and policy framework on forced labour, saying the reforms helped the country secure a relatively favourable tariff position compared to many of its global competitors.
FIEO also urged exporters to assess the impact of the new tariff on a product-wise basis, taking into account applicable US duties, available exclusions and the tariff treatment of competing supplier countries.
It advised exporters to further strengthen supply chain compliance, improve productivity and continue investing in quality, innovation and value addition to tap emerging opportunities in the US market.
— IANS
Reader Comments
Interesting perspective from the Indian side. The US seems to be playing a balancing act - hitting China harder while giving India a relatively milder treatment. But as an observer, I wonder if this differential will actually translate into real trade gains for India, given long-standing supply chains with China and Vietnam.
This is good news for Indian exporters but we shouldn't be complacent. The government needs to look at improving infrastructure at ports, reducing logistics costs, and ensuring easier access to credit for small exporters. The tariff advantage won't matter if our internal costs remain high. Also, forced labour reforms mentioned - at least something positive came out of that!
While the FIEO president is putting a positive spin, the reality is that any tariff increase hurts small and medium exporters the most. The compliance costs for proving no forced labour, supply chain audits - all add up. And many of our small garment units in Tirupur and Ludhiana are struggling. Hope they get proper support from the government during this transition.
From a US buyer's perspective, Indian suppliers have been reliable. The 10% tariff is manageable compared to the 25% on Chinese goods. But the real test will be in sectors like pharmaceuticals and IT services - these are India's real strengths. Glad to see key categories like pharma ingredients got exclusions. That's where the real money is.
Honestly, I'm tired of these tit-for-tat tariff wars. Yes, we may have a slight advantage over China, but what about our own domestic market? We need to reduce dependence on US exports and focus on manufacturing for our 1.4
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