Trump tariffs on India- In recent months, many Indian exporters have found themselves at a disadvantage because of the recently imposed taxes by the United States. As the GTRI has shown us, Indian exporters were hit hard by taxes being placed on their products when the GTRI released its most recent data on Export Volume in June of 2020. Exports decreased by almost 28.5% in these five months and decreased from $8.83 Billion to $6.31 Billion. In this short period, there was a spike in the amount of the tax (duty) imposed upon Indian goods by the United States. By late August of this year, Indian goods were taxed at 50% of their sale price. The President used the high amount of taxes imposed on Indian goods as a way to enhance his tough-on-Russia posture. As a result, the Indian products quickly became subject to high taxes.
Labour-intensive sectors suffer the deepest contraction
A huge drop was seen in exports of Gems/Jewelry, while a crash occurred in Solar Panel shipments. Many industries (Textiles/Garments) have faced tremendous loss from their respective orders moving towards Vietnam/Bangladesh. The various Production Centers in India were under tremendous pressure due to these losses, with An increase in Job Losses throughout countless clusters. Trump tariffs on India, As with the aforementioned sectors, Chemicals have had a major contraction. Many regions of India saw a significant drop in Marine Products.
An increase in the number of buyers moving new procurement sources (Ecuador/Vietnam) was recorded. A rapid decline of Agri-products exports occurred in India. A rapid decline occurred in the Cocoa shipments, to nearly zero. Many other Agri products (Dairy/Honey/Spices) showed drastic drops in both shipments and production. In numerous areas of India, cancelled orders and increasing inventories have been reported.
Experts urge policy support and tariff rollback talks
Two urgent recommendations were made by GTRI – that India should move quickly with the Export Promotion Mission (EPM) and that the EPM is currently inactive and not being used; therefore, it negatively impacts exporters on an ongoing basis as they are experiencing consistent interruptions in funding. Furthermore, GTRI requested that there be defined guidelines for exporters that can be relied upon regularly so that MSME’s will receive predictable assistance.
GTRI’s second request relates to a re-engagement process to seek a rollback of tariffs (25% surcharge). Removing this surcharge will have a direct positive impact by halving effective duty rates of many different products. This tariff rollback engagement will also directly help those labour-intensive sectors immediately. Lastly, a successful tariff rollback re-engagement process will create an advantage for India on the negotiating table.
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