New Delhi:
The US mutual tariff will have a small indirect impact on India, given the low dependence on the foreign trade of the domestic economy, Niti Aayog member Arvind Virmani said on Friday.
He further stated that in the moderate period, negative factors emanating from the implementation of tariffs will be minimized with the implementation of the first phase of the proposed USA-India bilateral trade agreement.
Over the long term, the eminent economist said that the last BTA with us will aim to increase the possible profit over the next 5 to 10 years.
The US has announced a 26 percent mutual tariff on India, stating that New Delhi implements high imports on US goods.
“This (26 per mutual tariff) will have a small indirect effect on India, which is looking at our low trade dependence,” he said.
Mr. Virmani said that the mutual tariff is calculated by a formula that includes the American trade deficit with a country and imports from that country.
He said that although every country is feeling the impact of increasing the uncertainty of trade policy during the last few months, “World trade, FDI, investment and GDP growth will all affect.” According to Mr. Vimani, the impact of the difference American tariff depends on commodity and relative tariffs on competitors.
“Very roughly, there are three categories; (A) discounted goods (eg pharmaceuticals): very little or no effect. (B) Export in which the largest competitive in the US market is from the European Union or LAC: to reduce India’s demand, (C) Exports in which East and SE are from Asia, India’s demand will increase,” he said.
Responding to a question on the impact of mutual tariffs on the rate of inflation, Virmani said, “Other things unchanged, the impact of US tariff on any one country X will have to reduce the demand for imports from that country and is an defamation effect (not inflation).” He noticed to what extent American imports from many countries decrease, all these countries will reduce their export prices in other countries other than America.
Given that there is a direct impact on the rest of the world, deflation is there, “supply-side disruption although some goods can produce a sharp rise in prices, whose total inflation effect is difficult to predict at this point.” Can India turn this crisis into an opportunity, he said that every challenge is an opportunity and it is not a different.
“From the time of the US President’s election, many of us are wondering how to maximize the benefits and reduce the cost of American functions,” he said.
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According to a White House document, the US has revised the import duties to apply from 27 percent to 26 percent to India.
These duties will be applicable from 9 April.
Announcing a mutual tariff against various countries on Wednesday, US President Donald Trump organized a chart, showing that countries such as India, China, UK and European Union will now have to pay.
The chart indicated that India charged 52 percent tariffs, including currency manipulation and trade barriers, and the US will now charge India with a 26 percent concessional mutual tariff.
Earlier, the White House documents showed 27 percent duty on India.
Although, according to the latest update, it has been revised up to 26 percent with the US up to 26 percent, in India in 2023-24, goods in goods had a 35.32 billion USD trade surplus (difference between imports and exports) of USD 35.32 billion. It was USD 27.7 billion in 2022-23, USD 32.85 billion in 2021-22, USD 22.73 billion in 2020-21 and US $ 17.26 billion in 2019-20.
In 2024, India’s main exports to the US were included to include drug formulation and biological (USD 8.1 billion), telecom instruments (USD 6.5 billion), precious and semi-precious stones (USD 5.3 billion), petroleum products (USD 4.1 billion), USD 3.2 billion (usD 3.2 billion). Iron and Steel (USD 2.7 billion).
Import includes crude oil (USD 4.5 billion), petroleum products (USD 3.6 billion), coal, coke (USD 3.4 billion), cut and polished diamonds (USD 2.6 billion), electric machinery (USD 1.4 billion), aircraft, spacecraft and parts (USD 1.3 billion), and gold (USD 1.3 billion).
(Except for the headline, the story has not been edited by NDTV employees and is published by a syndicated feed.)
