STANDING STRONG

THE U.S. HAS IMPOSED 50% TARIFFS ON INDIAN EXPORTS AND NEGOTIATIONS HAVE BROKEN DOWN. WHAT LIES AHEAD?

- BY ASHUTOSH KUMAR

TOM CRUISE-STARRER Hollywood flick Oblivion (2013) should have had nothing to do with the tariff travails the global economies have been facing in the wake of U.S. President Donald Trump's moves since April this year.

Yet, after the conclusion of the India-U.K. Comprehensive Economic and Trade Agreement (CETA) on July 24, when a top Indian government functionary was asked about the possibility of the U.S.-India bilateral trade agreement anytime soon, he referred to the movie, which he had watched on his way back to India from the U.K. after the CETA was signed.

Borrowing from the plot of the dystopian movie, set in a post-apocalyptic Earth in 2077, the functionary said the film showcases mind-reading technology, which, sadly, is not available now, and therefore, one can't really say what is going on in Trump's mind.

The government functionary was bang on point. In a sudden U-turn on July 30, Trump threw the U.S.-India trade talks in disarray by announcing that America will impose penal tariffs on India for buying crude oil from Russia amid the Ukraine crisis. On August 7, an additional 25% penal tariffs were imposed by the U.S. administration on India, taking the total tariffs to 50% with effect from August 27. As things stand now, the five rounds of trade talks between India and the U.S., held since January this year, have been jeopardised and a sixth one scheduled in late August has been cancelled.

With the tariff blow likely to hit multiple sectors of the economy such as textiles, and gems and jewellery, the finance ministry has reached out to the stakeholders. “The government will announce a targeted package for the affected sectors, to be effective till the time those sectors find alternative geographies for exports," a top finance ministry source tells Fortune India.