US decision of additional 25% tariff unjustified, say officials

THE TARIFFS PUT INDIA ATA SIGNIFICANT DISADVANTAGE WHEN COMPARED TO EXPORT RIVALS SUCH AS BANGLADESH, VIETNAM AND INDONESIA

- Rezaul H Laskar and Rajeev Jayaswal

India sees the Trump administration's decision to double tariffs on its goods to 50% as “unjustified”, people aware of the matter said, adding that while there is still room for negotiations, New Delhi is now prepared to “take all necessary steps” to mitigate the economic impact through export diversification and domestic market expansion.

The 25% punitive tariff for purchasing Russian crude oil took effect on Wednesday, adding to an earlier 25% reciprocal tariff to bring total US duties to 50% on goods including garments, electrical parts, gems and jewellery, leather and footwear, furniture, chemicals and marine products.

“The tariffs are unjustified and the Indian side's response to the Trump administration's actions has been restrained and responsible,” one of these people said, emphasising that contacts between two sides continue with the aim of reaching a trade deal.

There was no official reaction to the punitive tariff from the commerce ministry or external affairs ministry on Wednesday.

The tariffs put India at a significant disadvantage when compared to export rivals such as Bangladesh, Vietnam and Indonesia - especially on account of textiles. Some exports ~ estimates range from 30%-40% by value —such as smartphones and pharmaceutical products remain exempted.

India characterised the current tensions as a “temporary phase in a long-term relationship” given that trade between the countries is “broadly complementary in nature, contributing to each other’s competitiveness and economic growth.”

However, officials stressed that while negotiations continue, New Delhi will not compromise on protecting farmers, small producers and micro, small and medium enterprises.