Chances of US tariff action against India very thin

The reason being average tariff levied by India on US goods is already below 5%, much lower than India’s overall tariff average. Indian government has started taking some measures to avoid tariff action by the US government.
Image used for representational purpose only.
Image used for representational purpose only.File photo
Updated on
2 min read

NEW DELHI: Even as the US wages tariff war against China and other countries, the likelihood of a reprisal against India is not very high, feel analysts TNIE spoke to. Though they admit with Donald Trump at the helm of affairs, nothing can be ruled out, they feel chances of a US tariff action against India are very less.

The reason being average tariff levied by India on US goods is already below 5%, much lower than India’s overall tariff average. Indian government has started taking some measures to avoid tariff action by the US government.

Experts say India-US relation should not be seen only in terms of trade balance – India has trade surplus of $35 billion with US – but should be seen in terms of overall economic partnership. “Look at the revenue that US tech companies like Google generate from India,” says Ajay Srivastava, founder, Global Trade Research Initiative (GTRI). While India’s simple average tariff is 17%, the actual duties on key US imports are much lower, says Srivastava.

He cites examples of petroleum crude ($5.03 bn) which faces a minimal duty of Rs 1 per tonne, cut and polished diamonds ($3.09 bn) are taxed at 0%. Other major imports, including coking coal ($2.37 bn), aeroplanes over 15,000 kg ($1.94 bn), steam coal ($1.76 bn), and liquefied natural gas ($1.41 bn), carry a modest 2.5% duty.

“In reality, the weighted average tariff on US exports to India is below 5%, much lower than India’s overall tariff average,” says Srivastava of GTRI.

Trade economist Ritesh Kumar Singh says India’s trade surplus with the US is as high as that with Canada, but New Delhi has started taking corrective measures. “It has cut duties on items of US interests such as bikes, agreed to take back illegal immigrants, so l am hopeful that some understanding will be reached between lndia and the US,” he says.

The government in the recent budget has undertaken the exercise to rationalise the Customs duty, bringing average import duty from 11.65% to 10.65%, which as per chairman, Central Board of Indirect Taxes and Customs (CBIC), Sanjay Kumar Agarwal, is in line with ASEAN countries.

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