Industry divided over impact of US tariff on imports

FIEO president SC Ralhan said assessing the impact of the recently imposed 26 per cent reciprocal tariffs by the United States of America on Indian exports revealed a complex scenario. While these tariffs presented challenges, India’s position remained comparatively favourable, said Ralhan, quoting the example of countries such as Vietnam that faced a 46 per cent tariff, China at 34 per cent, and Indonesia at 32 per cent, placing India in a relatively better position than key competitors.

The FIEO chief said despite the tariffs, certain sectors in India, including apparel, gems and jewellery, leather, electronics, chemicals, plastics, and furniture, may experience a diversion of exports, potentially offsetting some adverse effects.

Ralhan emphasised the timely conclusion of a bilateral trade agreement (BTA) between India and the US was crucial to mitigate these tariffs and provide relief to Indian exporters. Such an agreement could establish a structured framework for resolving tariff challenges, thereby reducing the likelihood of unilateral trade measures or retaliatory tariffs.

At the same time, the president of World MSME Forum, Badish Jindal, said the new tariffs announced by America, under the ‘Liberate America’ campaign, would have adverse effects on the entire world, including India.

“If we look at the trade relations between India and America, it does not have any major impact on America because only 2.8 per cent of America’s imports come from India, but for India it can be a major shock as America’s share in India’s exports is 18.62 per cent. America has decided to impose 26 per cent tariff on India but India is not the only country on which the tariff has been imposed,” said Jindal

At the same time Jindal added that India also exported several items to the US. He said USA has imposed 26 per cent duty on India, whereas it was 34 per cent for China. So, in a few products it can prove to be a win-win situation for India. India can benefit in exports of machinery, iron and steel products, electrical and electronics, garments and auto parts, he added.