The United States recently announced new tariffs affecting 60 countries, including India, as part of an investigation into forced labor practices. The tariffs are set at 10% for India, providing a competitive advantage over some of its peers, particularly China and Vietnam, which face higher rates of 12.5%. This announcement follows a period of recovery for India's exports to the US, which had begun to improve after the Supreme Court invalidated some previous tariffs, according to Mint.
Key Details
Despite this advantage, challenges remain for Indian exporters. A report from Emkay highlighted that India's textile and apparel sector did not receive tariff-rate quota (TRQ) exemptions, unlike competitors such as Bangladesh and Cambodia. This lack of exemptions could diminish India's competitiveness in textiles, which previously constituted 13-14% of its total shipments to the US but has since dropped to 8-9%. The report cautioned that while the tariff burden is lower, Indian textile exporters may still face significant disadvantages compared to their peers.
Background
India's exports to the US fell by 16% to $26.2 billion in the three months ending May 30, down from $31.3 billion in the same period the previous year, according to Moneycontrol. This decline underscores the ongoing pressures faced by Indian exporters despite the newly announced tariffs.
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The new tariffs could benefit Indian exports in sectors not affected by TRQ exemptions, potentially boosting competitiveness against other nations. However, the textile sector's challenges may lead to continued pressure on overall export performance. Investors will watch for further developments regarding US trade policies and their implications for India's export landscape.