Exporters’ woes: Trump out to reduce India’s trade surplus with US

PUNITIVE tariffs imposed by US President Donald Trump are taking their toll on Indian exporters. India’s merchandise exports to the US are on the decline, while the imports are going up. Labour-intensive sectors such as engineering goods and textiles are among the worst hit as US tariffs are leaving Indian items costlier than those made by major competitors like China and ASEAN countries. The difficult situation has prompted the RBI to roll out a relief package, which aims to ease the debt repayment pressure on exporters. The measures announced include a four-month loan moratorium and an extension of export credit tenure to 450 days.

These steps, however, can only provide a breather to aggrieved traders. They are pinning their hopes on the India-US trade deal, which has been inordinately delayed. According to Commerce Secretary Rajesh Agrawal, the deal’s first tranche — whose focus is on addressing reciprocal tariffs — is now “near closure”. It’s an acid test for the Modi government to make Trump drastically lower the crippling tariffs, which were levied because India defiantly continued to purchase Russian oil.

It’s clear that Trump is going all out to reduce India’s trade surplus with the US. With the trade agreement in the works, New Delhi is preferring to play along. The one-year deal signed by Indian state-run oil companies to import cooking gas LPG from the US seems to be a step in this direction. The US President and his deputy have repeatedly called PM Modi a tough negotiator. The onus is on the Indian government to avoid compromises that will tilt the trade deal heavily in America’s favour. The US push for greater access to India’s agricultural and dairy sectors also needs to be handled deftly as the livelihoods of millions of Indians are at stake.