The United States has imposed a 10% tariff on Indian goods under Section 301, but economists believe the immediate impact on India’s exports will be limited.While the move offers some relief compared with higher tariff proposals, they say that the real challenge lies in reducing the country’s dependence on a single export market by broadening its global footprint while continuing to deepen trade ties with the United States.They added that the latest decision provides much-needed certainty after months of shifting tariff proposals, but stressed that sustained export growth will depend more on competitiveness and export diversification than on marginal changes in tariff rates.
Tariff cut is a positive step
Economist Sunil R Parekh told ANI that the reduction in tariff should be viewed as a positive outcome, adding that it reflects India’s efforts to put forward its case before the US administration. At the same time, he said the change from 12.5% to 10% would not materially alter the economic outlook.“In my opinion, the difference in tariff between 12.5% to 10% is of marginal significance. It’s a good step. I think it shows that we have been able to negotiate and present India in the correct light to them,” Parekh said.He noted that the impact would vary across industries depending on factors such as labour-intensive production and future regulatory changes, but maintained that the overall short-term effect would remain limited.Rejecting allegations of forced labour involving Indian exporters, Parekh called them “absolutely baseless”. He said India’s labour laws are stringent and exporters have already furnished detailed information to the US authorities.Parekh also stressed that widening India’s export footprint would be the most effective safeguard against policy changes in any one country.“The best way to mitigate against US fluctuation is to diversify exports,” he said.
Certainty after months of changing proposals
Sharing a similar view, Vishwanath Pingali, professor at the Indian Institute of Management (IIM) Ahmedabad, said the latest tariff settles months of uncertainty and leaves India among the countries facing the lowest tariff rates under the latest US action.“I think this 10% may come as a closure… settling at the best tariff rate that the US has imposed on any country, I think this is a good thing,” Pingali told ANI.He said sectors such as textiles, where India competes aggressively in global markets, could see greater benefits from the lower tariff, while the effect on several other sectors may be less pronounced.Pingali added that investments in technology, government measures to strengthen manufacturing and efforts to tap new export markets would be critical to making Indian exports more competitive and reducing vulnerability to future tariff changes.While welcoming the latest tariff decision, both economists said India’s long-term export strategy should centre on market diversification, stronger competitiveness and continued engagement with the United States.
