India's Exports Face Minimal Impact from New US Tariffs, Textile Sector Needs Monitoring

New Delhi: India's exports are unlikely to be significantly impacted by the latest tariffs imposed by the United States, although the textile sector will require close monitoring, Federation of Indian Export Organisations (FIEO) Director General and CEO Ajay Sahai told ANI.

The United States on Thursday unveiled fresh tariff slabs of 10 per cent and 12.5 per cent on several economies under its Section 301 action. India has been placed in the lower 10 per cent tariff category.

The Office of the US Trade Representative (USTR) announced tariffs ranging from 10 per cent to 12.5 per cent on 60 economies as part of action directed by US President Donald Trump over what it described as inadequate measures to prohibit the import of goods produced with "forced labour."

According to the USTR, India is among 17 economies that will face the lower 10 per cent tariff. The group also includes the United Kingdom, Canada, Indonesia, Mexico and Bangladesh.

Reacting to the development, Sahai said, "It's not a welcome development but at the same time it is not going to impact our exports. If you see that India beside other 16 countries is placed into 10 per cent category where a large number of countries around 38 has been put into 12.5 per cent category."

He added, "EU and Taiwan, are the exception, are under 10 per cent category, but that may include the MFN tariff also. And South Korea, Japan, Switzerland, they are in 12.5 per cent country, including MFN. So by and large, we have got the best deal among these countries. The countries who are not covered by the investigation are not the countries who have our sizable competition in this area. And therefore we feel that it is not going to impact our exports."

However, Sahai cautioned that India's textile sector should closely monitor the proposed tariff rate quota (TRQ) for some competing countries.

"But we have to be little careful in particularly in the textile sector because they have worked out a TRQ which may be rolled out in times to come in respect to Bangladesh, Cambodia, Indonesia and Malaysia. So these are the area where we have to see what exactly finally comes in the TRQ and whether they will give in further concession or not," he said.

India has not been included in the textile and apparel tariff-rate quota (TRQ) exemption available to Bangladesh, Cambodia, Indonesia and Malaysia for specified exports using US-origin cotton and fibre.

Sahai also pointed out that products already covered under Section 232 tariffs would not be affected by the latest announcement.

"Secondly, all the products where the tariff was imposed under section 232, including steel, aluminium, automobile component they are not impacted by the tariff. So the impact is limited though of course we will say that it's not a good development because India has already given adequate proof that there is no use of the forced labor import products into India. DGFT has recently rolled out a notification also not allowing such imports onto the country and we are signatory to international labor organization and the convention on the forced labor also,"