Next-generation reforms to reduce borrowing costs

The immediate impact of US tariffs on Indian exports may appear limited, but its secondary and tertiary effects on the economy pose challenges that must be addressed, the finance ministry said in its latest monthly economic report.

- FE BUREAU

In this context, the ongoing India-US trade negotiations will be crucial, it said in its July review of the economy, even as uncertainties persist on whether the tariff quantum could be minimized anytime soon.

The US government has imposed 50% additional tariffs on Indian exports to America, barring a few sectors, beginning Wednesday. The tariff increase will make Indian goods uncompetitive in several sectors, as many other Asia Pacific countries attract a 15-20% tariff.

While India is actively pursuing a diversified trade strategy to sustain its resilient trade performance, "These initiatives will take time to show results and may not fully address the shortfall in exports to the US that may arise if the current tariff rates on India persist," the ministry said.