New US tariff unlikely to dent India’s export competitiveness: Exporters’ body

New Delhi, July 24 (IANS) The additional 10 per cent Section 301 tariff imposed by the US on imports from India is unlikely to significantly affect the country’s export competitiveness, as many rival exporting nations have been subjected to comparable or higher tariff rates, apex exporters’ body Federation of Indian Export Organisations (FIEO) said on Friday.

The new tariff would increase the landed cost of Indian products in the US market, its overall impact should be viewed in the context of the tariff treatment accorded to competing supplier countries rather than in isolation, according to FIEO President S.C. Ralhan.

“India has not been singled out under the new US measure. The fact that India has been placed in the lower 10 per cent tariff category, while several competing exporting nations, including China, Vietnam, Thailand, Türkiye, the UAE, Brazil and South Africa, face a higher tariff of 12.5 per cent, reflects the recognition by the US of the policy measures taken by the Government of India to strengthen its framework relating to forced labour,” Ralhan said.

He added that India’s direct competitors in labour-intensive sectors such as textiles, garments, leather and footwear — including Bangladesh, Cambodia, Pakistan, Sri Lanka, Indonesia and Malaysia — have also been subjected to the same 10 per cent tariff.

“As a result, Indian exporters largely retain their relative competitiveness in these sectors, as competing suppliers will face a similar duty incidence in the US market,” he said.

Ralhan also said Indian exporters could benefit from trade diversion in product segments where rival exporting countries are subject to the higher 12.5 per cent tariff.

“Even a differential of 2.5 per cent can influence sourcing decisions in highly competitive markets, particularly where Indian exporters are able to offer quality products, reliable deliveries and stable supply chains,” he noted.

FIEO emphasised that the US measure is part of a broader country-level policy applicable to several economies and should not be interpreted as a finding against Indian exporters or products.

It also pointed out that several key product categories, including steel, aluminium, auto components, pharmaceuticals, pharmaceutical ingredients and certain agricultural products already covered under Section 232 measures, continue to enjoy exclusions, limiting the impact on a number of export sectors.

The exporters’ body credited the government for strengthening India’s legal and policy framework on forced labour, saying the reforms helped the country secure a relatively favourable tariff position compared to many of its global competitors.

FIEO also urged exporters to assess the impact of the new tariff on a product-wise basis, taking into account applicable US duties, available exclusions and the tariff treatment of competing supplier countries.

It advised exporters to further strengthen supply chain compliance, improve productivity and continue investing in quality, innovation and value addition to tap emerging opportunities in the US market.

–IANS

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