Simply Put: How India, US duties trade off

India has hiked duty on 29 kinds of goods imported from the US, following a similar move by the US on what it imports. What are these goods, and how much extra duty has India targeted with its move?

Written by Deepak Patel , Aanchal Magazine | New Delhi | Updated: June 22, 2018 8:43:41 am
US imports steel items worth approximately 5 million and aluminium products worth 4 million from India. (C R Sasikumar)

In a notification Wednesday night, India hiked duty on 29 items imported from the US. This was in retaliation against a US announcement in March imposing tariffs on steel and aluminium items — 25% and 10% respectively — imported from all countries except Canada and Mexico. What will be the effect of these moves?

As per UN COMTRADE-WITS data sourced by the government, US imports steel items worth approximately $795 million and aluminium products worth $424 million from India. The US move will help it collect an additional $241 million on imports from India — about $198.6 million from the duty on steel products, and $42.4 million from the duty on aluminium goods.

Balancing act

Last week, India told the World Trade Organization (WTO) that it plans to increase the customs duty on 30 products imported from the US. It told the WTO that it has decided these additional duties in a way that it would help the government earn an additional $241 million. “India wishes to clarify that suspension of concessions shall be equivalent to the amount of trade affected by United States’ measures. To this end, India reserves the right to adjust the specific products for which suspension of concessions is effectuated, and its right to adjust the additional rate of duty imposed on such products,” India said.

The motorcycle

The 30 items listed by India included lentils, boric acid, fresh apples and shelled almonds. Another product listed was motorcycles with internal combustion engine capacity over 800 cc. On Wednesday, India left out such motorcycles and announced imposition of duties on the 29 other products.

In the original list to the WTO, India had said it may impose an additional duty of 50% on such motorcycles. This measure was targeted at Harley-Davidson motorcycles. In an address to a joint session of Congress in 2017, US President Donald Trump had hinted at mistreatment to companies such as Harley-Davidson by way of high import duties, up to 100% in some markets, but he did not name India. On February 26, days after India abruptly announced slashing of duties on imported motorcycles, Trump made it clear that he did not think these this was enough.
These motorcycles constituted a small fraction of the overall trade involving the 30-product list. In 2017, India imported motorcycles (over 800 cc) worth $10.6 million.

Almonds biggest

Of the duty-hiked 29 products, the category that will bring in the highest additional duties is almonds that are fresh or dried in shell. According to Indian government estimates, India imported such almonds worth $580.63 million from the US in 2017. On Wednesday, India increased the duty from Rs 35 per kg to Rs 42. This means it will earn additional duty of $116.13 million from almonds in shell alone.

The second biggest impact will involve fresh apples. India, which imported fresh apples worth $96.57 million from the US in 2017, has increased the import duty from 50% to 75%. The additional duty this will bring is estimated at $24.14 million. The product facing the third biggest impact will be diagnostic reagents, for which the duty has been doubled to 20%.

Way ahead

Commerce and Industry Minister Suresh Prabhu went on a two-day visit to the US earlier this month to discuss these matters with top officials including Secretary of Commerce Wilbur Ross and United States Trade Representative Robert Lighthizer. On June 26-27, senior government officials of the two countries will hold meetings to discuss these matters further.

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