India Rebuts Tariff Criticism, Cites Global Parallels and Strategic Shifts
- India counters U.S. tariff claims, highlighting that several countries, including the U.S., impose higher duties on key products.
- India proposes tariff reductions and boosts U.S. imports like oil and gas to balance trade and seek tariff exemptions.
- Experts urge strategic response, including market diversification, export incentives, and leveraging FTAs like the India-UK deal.
India has pushed back against former US President Donald Trump’s claims that the country imposes disproportionately high tariffs, pointing to global trade data that highlights similar or higher customs duties in countries like the US, Japan, and South Korea. According to WTO figures, the US itself levies substantial tariffs to protect domestic industries 200% on dairy, 196% on cereals and food preparations, 350% on tobacco, and over 130% on fruits and vegetables.
In comparison, India's tariff structure includes 150% on whiskey and wines and 100-125% on automobiles. Japan and South Korea also maintain steep duties with Japan taxing rice at nearly 400% and Korea imposing an 887% duty on certain fruits and vegetables. India’s simple average tariff stands at 17%, but the actual duties on key American imports are much lower, with a weighted average tariff below 5%.
To address trade imbalances, India has already ramped up its imports of US crude oil and natural gas and has expressed willingness to further lower average tariffs from 13% to 4%, in exchange for exemption from US-imposed tariff hikes initiated under the Trump administration.
Mahendra Patil, Founder and Managing Partner of MP Financial Advisory Services LLP, noted that the imposition of a 25% US tariff on Indian exports such as textiles, gems and jewellery, auto components, and pharmaceuticals presents significant challenges. “India Inc’s immediate priority is to diversify markets, accelerate value addition, and build domestic buffers to better withstand the unpredictability of global trade”, he stated.
He emphasized the importance of a calibrated fiscal strategy, recommending targeted support for affected export sectors, expedited refund processes, and temporary enhancement of incentive schemes. The recent India-UK Free Trade Agreement, offering tariff-free access to a critical market, presents a strategic window of opportunity for Indian exporters.
With domestic consumption contributing nearly 60% of India’s GDP and merchandise exports accounting for only 12% in FY24, India remains largely inward-focused. However, the current trade disruptions may serve as a catalyst for repositioning India within global value chains, transforming short-term shocks into long-term strategic advantages.
