New Delhi: Although full details are yet to emerge, the interim India-US trade deal framework indicates that India has received ‘best deal’ from the United States compared to others, including all its neighbours.
The trade deal unlocks the power of two large democracies working together for the shared prosperity of their people, giving unprecedented opportunities for farmers, MSMEs, entrepreneurs, and skilled workers.
The uniform 18 per cent rate gives India an edge over several countries in its neighbourhood and the wider region. Many of those exporters face higher barriers or less predictable access to the US market.
The 18 per cent rate also narrows the gap with Europe, which faces a 15 per cent tariff.
The US tariff on Indian goods comes close to those being levied on America’s closest allies, which include the United Kingdom (10 per cent), the European Union (15 per cent), Switzerland (15 per cent), Japan (15 per cent), and South Korea (15 per cent).
Some of the countries facing the highest tariffs from the US include Brazil (50 per cent), Myanmar (40 per cent), Laos (40 per cent), China (37 per cent), and South Africa (30 per cent).
The smaller difference improves the price position of Indian products. It helps exporters in textiles, apparel, leather goods, chemicals, and engineering items.
It also strengthens India’s hand against regional rivals competing on cost. The framework also opens a path to tariff removal on a wide range of Indian goods.
Moreover, the reduction of US tariffs on India effectively takes India’s rate below most ASEAN peers and puts it at an advantageous position compared to China.
“At the onset, this breakthrough is unequivocally positive for the real economy/exports, sentiments as well as financial markets, while further details are awaited,” DBS Group Research Senior Economist Radhika Rao said. Textiles, gems and jewellery, engineering goods, leather, and chemicals are likely among the key gainers in the immediate term, she added.
India is now among the nations with one of the lowest tariff rates being imposed by the Donald Trump administration compared with other Asian economies such as China, Pakistan, Indonesia, Bangladesh, and Vietnam.
(IANS)
