Multi-ministry panel to study impact of US reciprocal tariffs

India has set up a multi-ministry committee to study the impact of reciprocal tariffs the US has threatened to impose on Indian goods.

A committee under the Ministry of Commerce will work out the impact of the US administration’s decision. It will include the ministries of Agriculture, Food Processing, Industry and Electronics & IT, sources said.

At a joint press conference with Prime Minister Narendra Modi in Washington DC on February 13, US President Donald Trump had said, “We are going to charge whatever you charge”.

The two countries already have plans to negotiate the first tranche of a mutually beneficial multi-sector bilateral trade agreement by September-October this year. The multi-ministry committee’s findings will provide inputs to Indian negotiators for the trade agreement.

India will also weigh what type of custom duties would be levied on processed foods and agricultural produce. The sources said several US products had the potential to kill the domestic processed food industry.

Both countries have agreed to adopt an integrated approach to strengthen bilateral trade across the goods and services sector. This will include themes such as increasing market access, reducing tariff and non-tariff barriers, and deepening the supply chain integration between the two countries.

The State Bank of India, in a report released on Monday, said India’s economy was unlikely to face a significant impact from the US reciprocal tariffs.

Goldman Sachs estimates that the increase in the average effective tariff rate imposed by the US on Indian exports could potentially impact India’s GDP growth by 0.1-0.3 percentage points. Citi Research analysts have estimated potential losses of about $7 billion a year for Indian exporters due to reciprocal tariffs.

India’s exports to the US constitute roughly 2 per cent of its GDP, with higher tariff rates compared to the US, especially in sectors such as agriculture, textiles and pharmaceuticals.

Meanwhile, US President Donald Trump has said that his administration will “soon” impose reciprocal tariffs on countries such as India and China, reiterating what he had said during Prime Minister Narendra Modi’s recent visit to the US capital. Trump was speaking at the swearing-in of Commerce Secretary Howard Lutnick on Friday when he made the announcement.