Getty ImagesDonald Trump’s broad tariffs have impacted global commerce, but disruption frequently leads to new opportunities.
Starting 9 April, Indian goods will face tariffs of up to 27% (Trump’s tariff chart lists India’s rate as 26%, but the official order says 27% – a discrepancy seen for other nations too). Before the tariff hike, US rates across trading partners averaged 3.3%, among the lowest globally, compared to India’s 17%, according to the White House.
India “presents an opportunity” in textiles, electronics, and machinery” with the US imposing even higher tariffs on China ( 54 % ), Vietnam ( 46 % ), Thailand ( 36 % ), and Bangladesh ( 37 % ), according to the Delhi-based think tank Global Trade Research Initiative ( GTRI ).
Great export tariffs for China and Bangladesh give Indian textile manufacturers more room to grow in the US market. If Taiwan’s system and plan help are strengthened, India can tap into package, testing, and lower-end chip production, despite Taiwan’s dominance in electronics. Even a 32 % tariff-driven limited supply chain transition from Taiwan might benefit India.
The industries that are dominated by China and Thailand are mature for tariff-driven transfer, especially in the fields of technology, cars, and products. According to a word from GTRI, India can make money by attracting purchase, expanding production, and increasing exports to the US.
May India be able to capitalize on the occasion?
Higher taxes have raised costs for businesses that are dependent on global value chains, putting strain on India’s ability to compete in foreign markets. India has a major trade deficit despite growing imports, largely driven by services. India accounts for only 1.5 % of global exports. Trump has consistently referred to India as a “tariff ruler” and a “big offender” of trade ties. With his fresh taxes, there is a concern that Indian imports will be less aggressive.
ReutersNevertheless, Ajay Srivastava of GTRI believes that the US’s mercantilist price regime could spur India’s benefit from global supply chain adjustments.
India may improve its ease of doing business, invest in shipping and equipment, and uphold policy balance to fully exploit these options, according to the statement. If all of these requirements are met, India is well-positioned to become a major international hotspot for manufacturing and exporting in the upcoming years.
That’s much simpler to say than to do. Places like Malaysia and Indonesia may be better positioned than India, according to Biswajit Dhar, a business professional from the Delhi-based Council for Social Development think pond.
” We may have some lost ground in the garment industry then that Bangladesh is subject to higher tariffs, but the reality is that we have treated the industry as a twilight sector and made no investments.” How may we really benefit from these tax changes without expanding our ability? says Mr. Dhar.
Since February, India has ramped up efforts to win Trump’s favour – pledging $25bn in US energy imports, courting Washington as a top defence supplier and exploring F-35 fighter deals. To ease trade tensions, it scrapped the 6% digital ad tax, cut bourbon whiskey tariffs to 100% from 150% and slashed duties on luxury cars and solar cells. Meanwhile, Elon Musk’s Starlink nears final approval. The two countries have launched extensive trade talks to narrow the US’s $45bn trade deficit with India.
However, India was unable to leave the price war.
India may be concerned because there was a possibility that continuing trade negotiations would protect it from bilateral tariffs. According to Abhijit Das, former mind of the Centre for WTO Research at the Indian Institute of Foreign Trade, imposing these taxes right now is a significant setback.
Getty ImagesOne upside: pharmaceuticals are exempt from reciprocal tariffs, a relief for India’s generic drug makers. India supplies nearly half of all generic medicines in the US, where these lower-cost alternatives account for 90% of prescriptions.
Exports in important industries like technology, executive products, automotive components, industrial machines, and marine products could suffer, yet. Given the significant investments made through India’s flagship “production-linked incentives” ( PLI ) schemes to boost local manufacturing, it would be especially troubling for electronics.
” I’m concerned about the capacity of our producers because many of them are small producers who will struggle to withstand a 27 % tax increase, making them unprofitable.” The problem only gets worse as the firm costs go up, and the trade infrastructure keeps getting worse. According to Mr. Dhar,” we’re at a big disadvantage.”
Some people believe that Trump’s bargaining chip in India’s trade negotiations is these taxes. The most recent statement from the US Trade Representative reveals Washington’s dissatisfaction with India’s business practices.
The report, which was made public on Monday, highlights India’s tight import regulations for dairy, pork, and fish, which require non-GMO certification without any supporting evidence from science. Additionally, it criticizes India’s slow acceptance of genetically modified products and stent and implant prices.
India has been placed on the” Priority Watch List” due to concerns over intellectual property rights, which the report cites insufficient patent privileges, and lack of business secret laws. The record also has concerns about limiting dish policies and mandates for data localization, which further strain trade ties. Washington is concerned that India’s regulatory strategy is extremely in line with that of China. US exports could increase by at least$ 5.3 billion annually if these obstacles were removed, according to the White House.
Being in the middle of business negotiations just makes our risk worse, according to the author. This isn’t just about business exposure; it’s the whole package, according to Mr. Dhar. Additionally, expanding your opportunities and gaining a competitive advantage over Vietnam or China takes period.