India Placed in Lower Tariff Tier
Prelims:
Indian Economy
Mains:
GS Paper II-India and its Bilateral Relations, GS
Paper III-Indian Economy
Current
relevance:
The United
States Trade Representative (USTR) announced the final measures under Section
301 of the U.S. Trade Act, 1974, imposing an additional 10% ad valorem
duty on imports from India, while placing India in the lower tariff tier.
Highlights:
1.
Sustained diplomatic
engagement by the Government of India, the proposed 12.5%
additional tariff has been reduced to 10%, placing India in the lower
tariff tier among the affected economies.
2.
The decision limits the impact on Indian exports
while preserving India's relative competitiveness in the U.S. market.
3.
Section 301 of the U.S.
Trade Act, 1974:
Empowers the United
States Trade Representative (USTR) to investigate foreign government acts,
policies, or practices that are considered unreasonable, discriminatory, or
harmful to U.S. commerce.
4.
Final Measures favorable for India:
i.
Provides India with a
relative advantage over several other economies facing higher tariff incidence.
ii.
However an additional
tariff has been imposed, the overall impact remains limited because several
major export sectors have been kept outside its scope ie, Exports Exempt
from the Additional Tariff.
iii.
Nearly 45% of India's exports to the
United States remain exempt from the additional 10% Section 301 duty.
Major Exemptions are generic pharmaceuticals, smartphones, certain
specified products.
5.
Implications for India:
i.
Around 55% of
exports to the U.S. will face the additional 10% duty.
ii.
India's tariff burden is lower
than that of many competing economies, helping preserve export
competitiveness.
iii.
The proposed textile-specific
mechanism under the final measures is yet to become operational.
iv.
India continues to engage
with the U.S. on sector-specific issues.
v.
The tariff decision is
also linked to the broader objective of strengthening bilateral economic ties
through an ongoing trade agreement, India–U.S. Bilateral Trade Agreement
(BTA).
Source: PIB - https://www.pib.gov.in/PressReleasePage.aspx?PRID=2289348®=48&lang=1