Indian exports to the US will become more competitive after the imposition of higher tariffs by the Trump administration on China, Canada and Mexico, NITI Aayog said in a report on Monday.
The Aayog, in its third edition of “Trade Watch Quarterly”, said there would be significant opportunities for India in the US markets both in terms of the number of products and volume of the US market. “India is expected to gain competitiveness in 22 out of the top 30 categories (HS 2 level), accounting for a market size of US $2,285.2 billion,” the Aayog said.
Niti Aaayog said that China, Canada and Mexico are the leading exporters to the US in these categories, therefore higher tariffs on these countries at 30 per cent, 35 per cent and 25 per cent, respectively, will enhance India's competitiveness. It said India’s competitiveness will remain unchanged in 6 out of 30 categories, amounting for 32.8 per cent exports to the US and 26 per cent of the US total imports, amounting to US $26.5 billion.
While for six product categories at HS 2 level, India faces a higher average tariff (between 1-3 per cent) which can be negotiated with the US, the Aayog said, “In 78 products, accounting for 52 per cent of India’s exports and 26 per cent share in total US imports, India is expected to gain competitiveness.”
For 17 products (accounting for 28 per cent of India's export to the US) out of the top 100 products at the HS-4 level, the Aayog said India’s competitiveness remains unchanged due to no change in tariff differential. The Aayog also pointed out that “India stands to gain in sectors with high tariff gaps, which include minerals and fuels, apparel, electronics, plastics, furniture, and seafoods, in a US $1,265-billion market”.
Team reaches Washington for bilateral trade pact talks
Meanwhile, an Indian commerce ministry team has reached Washington for another round of talks on the proposed bilateral trade agreement (BTA), which will begin on Monday. Chief negotiator of India and special secretary, commerce, Rajesh Agrawal, will join the team on Wednesday. The four-day talks will end on Thursday. India's deputy chief negotiator for the proposed BTA has reached Washington for the talks on the first phase of the BTA.
The visit assumes significance as both sides have to iron out issues in sectors like agriculture and automobiles, and considering that the US has further postponed the imposition of additional tariffs on several countries, including India, until August 1.
India has hardened its position on the US demand for duty concessions on agricultural and dairy products. It has so far not given any duty concessions to any of its trading partners in a free trade agreement in the dairy sector. India is seeking the removal of this additional tariff (26 per cent). It is also seeking the easing of tariffs on steel and aluminium (50 per cent) and the auto (25 per cent) sectors. The country has also reserved its right under the WTO (World Trade Organization) norms to impose retaliatory duties.
The two countries are looking to conclude talks for the first tranche of the proposed bilateral trade agreement (BTA) by September-October. Before that, they are looking for an interim trade pact.
Last week, an official had said that “we are not differentiating between an interim or the first phase of the bilateral trade agreement. We are negotiating a complete deal. Whatever will be finished, we can package it as an interim deal and for the rest, talks will continue”.
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