PM Narendra Modi signals hardline on agri in face of US tariff pressure

Business Standard

4 days ago

Prime Minister says India will never compromise on farmers' interests; govt working on export support, market diversification, and domestic absorption strategy
Shreya Nandi Asit Ranjan Mishra New Delhi
Prime Minister Narendra Modi on Thursday declared that India will 'never compromise' on the interests of its farmers, livestock rearers, and fishermen — even if it means paying a 'heavy personal price'. His strong words came in the backdrop of the United States doubling additional tariffs to 50 per cent on Indian exports, signalling that New Delhi is unwilling to bend under Washington's pressure on agriculture market access.
'For us, the welfare of our farmers is of the highest priority. India will never compromise on the interests of its farmers, livestock rearers, and fishermen. And I am fully aware that I may have to pay a very heavy price personally, but I am prepared for it,' Modi said in his address at the M S Swaminathan Centenary International Conference.
India and the US could not seal an interim trade deal by the August 1 deadline, due to differences over market access for American dairy products and genetically modified crops.
Speaking to reporters in Washington DC, White House trade advisor Peter Navarro termed India as the Maharaja (emperor) of tariff. 'The rationale for the Indian tariff is very different from the reciprocal tariff. This was a pure national security issue associated with India's abject refusal to stop buying Russian oil,' Navarro said, explaining the reason behind the 25 per cent additional tariff imposed on Wednesday.
When asked whether countries that buy petroleum products from India may also face higher tariffs, Navarro said: 'We are looking at that all. It's got to stop. American dollars buy Indian products and that sets in motion where those dollars finance (Russian) war which then requires American taxpayers to pay for defending against the Russian armaments. That kind of trade doesn't work,' he added.
Three-pronged strategy
Meanwhile, the government is working on a three-pronged strategy to support exporters deal with the 50 per cent tariff the United States plans to impose on imports from India, a person aware of the matter said.
One of the ways will be to provide a sector-specific support scheme under the proposed ₹2,250 crore Export Promotion Mission. Another way to deal with the tariff hike is to focus on diversification of the export market and prioritising regions other than the US. Lastly, products that do not find export demand in the American market can be used to meet domestic demand.
'Schemes will be tailor-made to specifically support sectors that will be adversely affected by the substantial hike in tariff,' the person cited above told Business Standard.
'There should be a focus on diversification of the export market, since disrupted world trade also creates opportunities. The Department of Commerce and the export promotion councils are closely analysing and looking for opportunities in regions other than the US,' the person cited above said.
Exporters have said that the move is a severe setback for Indian exports, with nearly 55 per cent of India's shipments to the US market directly affected. Apparel and leather exporters will be the worst hit since this is the time orders for the summer season are placed.
It was observed that as much as 6 per cent of the industry will be directly affected by the higher tariff. 'The textile sector is one of the worst hit since it is a labour-intensive sector. Orders are generally long-term in nature, making the switch to export market diversion tricky,' the person said.
Exporters from the textiles and chemicals sectors have sought extension of the export-boosting Rebate of State and Central Levies and Taxes (RoSCTL) and Remission of Duties and Taxes on Exported Products (RoDTEP) for a five-year period. They also sought reduction in compliance burden for implementation of existing schemes such as advance authorisation. A reduction in port charges was also requested.
According to industry estimates, 20 products under the chemicals sector will be adversely affected, which in turn will impact 75 per cent of the $6 billion exports to the US.
The US is India's largest merchandise export destination. During FY24, India exported goods worth $86.5 billion, up 11.6 per cent year-on-year. Imports stood at $45.7 billion, making the surplus at $40.8 billion.