President-elect Trump stated on Tuesday that the US would introduce reciprocal tariffs on Indian products due to the high tariffs imposed by New Delhi on American goods. Experts suggest that India might need to reassess its import duties on specific items and could offer increased market access for certain American imports to alleviate Trump’s concerns.
Previously, the US has raised concerns regarding the high import duties on Harley Davidson motorcycles, as well as limited access for medical devices, equipment, and dairy products in India.
Addressing US Concerns
Officials assert that India’s most favoured nation (MFN)-weighted average import tariff is relatively low, approximately 5-6%. While select agricultural products encounter higher tariffs, even those are significantly lower than the rates outlined by the World Trade Organization (WTO). They note that most countries, including the US, apply elevated tariffs and various non-tariff barriers on agricultural goods. For instance, dairy products, fruits and vegetables, cereals, food preparations, and oils in the US face tariffs as steep as 130-190%.
One insider mentioned that any thorough evaluation of the impact or necessary measures can only occur after the Trump administration officially takes over on January 20.
Experts suggest that New Delhi has the option to impose retaliatory tariffs or approach the WTO while advocating for a strategic response.
“It makes sense to reconsider certain products for tariff adjustments to address US concerns,” remarked one expert who preferred to remain anonymous due to the sensitive nature of the issue. While tariffs are bound by WTO commitments or linked to MFN status rather than being country-specific, there is an opinion that a measured approach could be taken when evaluating the product list traded between India and the US.
“It is unfeasible for India to implement country-specific tariffs, as that would violate the most-favoured nation (MFN) principle,” stated Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO).
Tariff Review
Sahai believes that India can revisit certain tariff lines and strategize accordingly, even if it results in a slight duty loss on some products.
(You can now subscribe to our Economic Times WhatsApp channel)
