India's Exports Face 70% Tariff Threat, Economists Warn

Strategic Insights -

A recent economic think tank report urges the Indian government to provide targeted support for vulnerable sectors and pursue selective tariff cuts to mitigate the impact of a 50% tariff hike by the US. The report, authored by economists Ashok Gulati, Sulakshana Rao, and Tanay Suntwal, highlights the critical role of the US market for India and recommends "smart, tactical negotiation" in bilateral talks. The report also emphasizes the need to evaluate genetically modified (GM) products on scientific grounds rather than ideology, citing the inconsistency of banning GM soya domestically while permitting imports of soya oil.

Key Takeaways:

  • The ICRIER report estimates that nearly 70% of India's exports will be affected by the 50% tariffs announced by US President Donald Trump.
  • The report urges the government to provide targeted support for vulnerable sectors such as textiles and gems and jewelry, while pursuing selective tariff cuts on non-sensitive agricultural imports.
  • The report calls for "smart, tactical negotiation" ahead of the next round of bilateral discussions with the US.
  • The economists recommend evaluating GM products on scientific grounds rather than ideology and suggest GM corn could be approved for ethanol blending or poultry feed.
  • The report proposes steep tariff reductions for agricultural products with low domestic production, such as walnuts, cranberries, blueberries, and breakfast cereals.
  • The study projects smaller losses for agriculture than for other sectors but warns that certain products, such as semi-milled rice, may face intensified competition from rival countries.
  • The report also calls for targeted, time-bound incentives to help textiles and apparel manufacturers close the tariff gap with rival countries.

Statistics:

  • 70% of India's exports may be affected by the 50% tariffs (ICRIER)
  • The US is a critical market for India, accounting for a significant share of India's exports (ICRIER)
  • 50% tariff hike by US President Donald Trump (Source: US President's announcement)
  • 10-15% losses in exports of textiles and apparel due to US tariffs (ICRIER)
  • Semi-milled rice may see intensified competition from Thailand and Pakistan (ICRIER)
  • Herbal and nutraceutical exports may struggle to compete due to US tariffs (ICRIER)

Sources:

  • ICRIER - Indian Council for Research on International Economic Relations

- Paper by economists Ashok Gulati, Sulakshana Rao, and Tanay Suntwal