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Amid fears of export disruptions due to US reciprocal tariffs set to take effect April 2, the Ministry of Commerce and Industry Thursday asked the industry to identify areas where sourcing from China and other countries can be replaced by American goods, executives familiar with the development told The Indian Express.
This comes days after US President Donald Trump criticised India’s high tariffs in the automobile and agricultural sector. The government is working on tariff cuts and market access to avoid sweeping US tariffs that are reshaping global trade and fuelling a trade war involving key players like China and the European Union.
According to a statement from the Ministry, Commerce Minister Piyush Goyal said the government is working to protect exporters’ interests while simultaneously pursuing multiple strategies to ensure the best outcomes for Indian exporters.
On reciprocal tariffs, Goyal urged exporters to move beyond a “protectionist mindset” and encouraged them to be bold.
During a meeting with industry representatives Thursday, officials discussed the opportunities and impact of these tariffs. Steel and aluminium exporters informed the government that $5 billion worth of goods have already been affected by Trump’s 25 per cent tariffs on these metals, which took effect this week.
“The Micro, Small and Medium Enterprises (MSME) sector is particularly concerned, as exports worth $5 billion have been hit by Trump’s recent tariffs. Total exports under Chapters 72/73/76 amount to $5 billion. Chapter 73, covering iron and steel products, accounts for $3 billion and is primarily driven by MSME exporters,” said Pankaj Chadha, Chairman of the Engineering Export Promotion Council (EEPC) India.
“Since the voyage time to the US is around 60 days, about $1 billion worth of shipments are currently on the high seas and will be affected by this duty,” Chadha said.
Industry representatives also provided input on market access that the government could offer the US in sectors such as textiles, gems and jewellery, carpets, and electronics.
While the textile sector expressed willingness for zero-duty access on US products, the gems and jewellery sector urged the government to maintain a minimum 2.5 per cent duty on cut and polished diamonds, down from the current 5 per cent.
Meanwhile, several exporters told the government that India is already receiving higher orders as key US suppliers such as China, Mexico, and Canada face steeper tariffs.
“Apart from agriculture and few other sectors, these tariffs could work in India’s favour, as we produce goods at much lower costs than the US. Even if tariffs are reduced for the US in certain segments, competitiveness is what matters,” said a participant at the meeting.
Meanwhile, the World Trade Organization (WTO) has warned that increased trade policy uncertainty and the prospect of new tariffs could weigh on trade in the medium term.
“The latest reading of 102.8 for the barometer index is above both the quarterly trade volume index and the baseline value of 100. This would normally indicate that merchandise trade is above trend, with accelerating growth. However, rising trade policy uncertainty could have temporarily boosted trade as businesses and consumers front-load imports ahead of potential measures, possibly reducing demand later in the year. As a result, the barometer index should be interpreted with caution,” the WTO said in its report released Wednesday.
