Exporters claim that exempting India from U.S. reciprocal tariffs would enhance bilateral trade. FIEO argues for this exemption to facilitate trade growth, while concerns about stringent demands from the U.S. persist. Ongoing talks aim to finalize a bilateral trade agreement by 2025, with key areas of focus identified for negotiations.
Exporters assert that exempting India from reciprocal tariffs imposed by the United States would significantly enhance bilateral trade between the two nations. They emphasize that imposing tariffs on Indian goods would adversely affect shipments to the U.S. Reports indicate that U.S. President Donald Trump has announced forthcoming automobile tariffs while allowing for exemptions for select countries starting April 2.
The Federation of Indian Export Organisations (FIEO) advocates for India’s exemption, highlighting India’s constructive engagement with the U.S. across various platforms and its interest in establishing a Bilateral Trade Agreement. FIEO Director General Ajay Sahai noted that achieving the ambitious goal of increasing bilateral trade from approximately USD 200 billion to USD 500 billion necessitates measures to facilitate seamless trade, which the exemption would support.
An additional exporter mentioned that India’s tariff exemption would mitigate uncertainties, thereby boosting exports to the United States. With the U.S. having already imposed high tariffs on China, the Global Trade Research Initiative (GTRI) expressed skepticism regarding India’s chances of receiving such exemptions, pointing to Trump’s repeated characterization of India as a “high-tariff” nation.
GTRI Founder Ajay Srivastava warned that any exemption would come with stringent conditions, potentially requiring significant concessions from India beyond trade, such as facilitating Starlink operations and easing Tesla’s market entry. He advised that India must uphold its strategic interests and not make undue compromises, stating, “If Trump imposes tariffs, so be it.”
Negotiations for the proposed bilateral trade agreement commenced on Wednesday with Assistant U.S. Trade Representative Brendan Lynch leading discussions with Indian officials. The goal is to finalize a preliminary phase of the agreement by autumn 2025. The U.S. has sought increased market access in specific sectors, while India is considering duty reductions for labor-intensive industries.
In 2024, India’s principal exports to the U.S. consisted of drug formulations, telecom instruments, precious stones, and petroleum products. Conversely, its imports included crude oil, petroleum products, coal, and machinery. Tariffs, which are duties levied by the government on imported goods, play a crucial role in international trade dynamics as both countries navigate their bilateral relationship.
The discourse surrounding tariff exemptions highlights essential points for the future of Indo-U.S. trade relations. Exporters advocate for India’s exemption from U.S. tariffs to enhance seamless trade and realize the ambitious trade target. However, skepticism persists regarding the likelihood of such exemptions, along with calls for India to maintain its strategic interests in negotiations. As both nations work towards a bilateral trade agreement, ongoing discussions will shape their economic cooperation moving forward.
Original Source: www.business-standard.com
