The Tariff Trial

India has to work on multiple fronts

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The United States (US) has raised duties on imports from India to 50 per cent, with a 25 per cent levy linked to India's oil purchases from Russia coming into force.

Since the US accounts for nearly one-fifth of India's exports, the consequences for exporters are severe. According to estimates, about 66 per cent of India's exports to the US will be covered by the steep 50 per cent tariff and will affect labour-intensive sectors such as gems and jewellery, textile, handicrafts, and agri-products.

Higher tariffs will make Indian exports uncompetitive compared to other countries. Last financial year, India exported goods worth $86.5 billion to the US with a surplus of over $41 billion. If this level of tariffs is maintained, these numbers will change dramatically, with a range of consequences for India.

US President Donald Trump has also said that additional tariffs will be put on countries that have discriminatory rules for US tech companies. He would also restrict the supply of chips. This could again affect India.