India has raised tariffs on 28 items exported from the US with effect from 16th June 2019.
Post a successful SCO Summit, Modi-led India seems to have renewed confidence in its economic stance, and has joined China in retaliating with its own tariff on US exports.
- India’s decision to raise tariffs is retaliation to US’ revocation of preferential trading partner privilege for Indian products from 5th June.
- The US also hiked customs duties on a number of Indian imports, including certain steel and aluminium products.
- With the amendments notified, imports of certain products originating in USA would no longer be eligible for a lower rate of customs duty.
- The strain in trade ties between the two economies comes at a time when global economic growth rate is projected to slow down.
The United States formally terminated India’s eligibility for a duty-free import scheme for developing countries. US authorities opined that India had not given adequate assurances that it “will provide equitable and reasonable access to its markets” to US companies as required under relevant American trade laws.
The impending termination was previewed by a senior administration official, who described it as a “done deal” and said it is time for the two countries to move on, and try to resolve other trade irritants. The official had, however, left open the possibility of restoring these benefits if and when India complied with American demands for greater market access to it dairy products and medical devices sectors.
India to optimize export potential
Prime Minister Narendra Modi urged Chief Ministers of states, in the NITI Aayog meeting, to optimise their manufacturing and export potential. PTI reported that India may get about $217 million additional revenue from the retaliatory tariffs on items imported from the US.
Rajiv Kumar, Vice Chairman of federal policy think-tank NITI Aayog remarked at the meeting, “Given what is going on in the global economy today, this is the time we should make the effort to benefit from the gaps emerging in the supply chain in global markets.”