New Delhi–The additional 10% Section 301 tariff imposed by the United States on imports from India is unlikely to significantly weaken the country’s export competitiveness because several rival exporting nations face similar or higher rates, according to the Federation of Indian Export Organisations.
FIEO President S.C. Ralhan said the tariff would raise the landed cost of Indian products in the U.S. market, but its effect should be assessed in comparison with the duties imposed on competing supplier countries.
“India has not been singled out under the new US measure. The fact that India has been placed in the lower 10 per cent tariff category, while several competing exporting nations, including China, Vietnam, Thailand, Türkiye, the UAE, Brazil and South Africa, face a higher tariff of 12.5 per cent, reflects the recognition by the US of the policy measures taken by the Government of India to strengthen its framework relating to forced labour,” Ralhan said.
India’s direct competitors in labor-intensive industries such as textiles, apparel, leather and footwear — including Bangladesh, Cambodia, Pakistan, Sri Lanka, Indonesia and Malaysia — are also subject to the 10% tariff.
“As a result, Indian exporters largely retain their relative competitiveness in these sectors, as competing suppliers will face a similar duty incidence in the US market,” he said.
Ralhan said Indian companies could also benefit from the diversion of trade in product categories where competing countries face the higher 12.5% tariff.
“Even a differential of 2.5 per cent can influence sourcing decisions in highly competitive markets, particularly where Indian exporters are able to offer quality products, reliable deliveries and stable supply chains,” he noted.
FIEO said the tariff is part of a broader country-level policy affecting several economies and should not be interpreted as an adverse finding against Indian exporters or Indian-made products.
The organization said several major product categories, including steel, aluminum, auto components, pharmaceuticals, pharmaceutical ingredients and certain agricultural products already covered by Section 232 measures, remain excluded from the new tariff.
Those exclusions are expected to limit the effect on several important Indian export industries.
FIEO credited the Indian government with strengthening the country’s legal and policy framework on forced labor, saying the measures helped India secure a more favorable tariff rate than many of its global competitors.
The exporters’ organization urged companies to evaluate the tariff’s effect on individual products by considering applicable U.S. duties, available exclusions and the rates imposed on competing suppliers.
It also advised exporters to strengthen supply chain compliance, raise productivity and continue investing in quality, innovation and value-added products to capitalize on emerging opportunities in the U.S. market. (Source: IANS)
