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Economic Times

25% tariff a negotiation tool; India must use August talks wisely: Anurag Singh

So realistically, buying more aircraft or defense equipment is what's likely. And that's not unreasonable — India does need both. So if those purchases help balance trade, it could be a win-win. The US has imposed a 25% tariff on India, a move seen as a pressure tactic to push India into trade negotiations. While surprising, it's viewed as manageable, with potential for Indian exporters and American importers to absorb the impact. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads "Ultimately, the 25% tariff — half of it could be absorbed by Indian exporters, and the rest by American importers. So, again, it's manageable. I see it as a conscious decision by the Indian government, and one we should be okay with," says Anurag Singh , Managing Partner, Ansid Capital.I'm a little surprised by the notion that India was in the best position to strike a deal. Every other major trading partner among the top 10 with the United States has already struck a deal — except India. So, it was inevitable that some kind of tariff was coming. Threats only work to a certain point. Once a deadline is set, if Trump had deferred even this one, it would have looked weak on his in that context, it's not a big deal. This is a choice India made. Yes, it is a pressure tactic, of course. If tomorrow India agrees to what the US administration wants — say, opening certain sectors — then the tariff could be reduced from 25% to 20%, even down to 15%, depending on what India is willing to the problem is, it's not very clear what India was actually willing to put on the table. We've heard about India's red lines — what it wouldn't accept — but not much about what it would concede. In that absence, this decision doesn't feel like a big loss. If this is the choice India made, that's fine. We should accept it and move the 25% tariff — half of it could be absorbed by Indian exporters, and the rest by American importers. So, again, it's manageable. I see it as a conscious decision by the Indian government, and one we should be okay there's no breakdown here. Let's understand this — most countries already face around 20% tariffs. So India getting hit with 25% isn't out of the at countries like the Philippines, Indonesia, Japan, South Korea, Vietnam — even the European Union. The EU accepted a 15% tariff after essentially opening its economy to near free trade with the in comparison, if India got 25% and didn't have to open much more of its economy beyond what it's already importing, that's not a bad said, when the US delegation visits, the focus will likely be on addressing the $40 billion trade deficit the US has with India. India exports about $85 billion worth of goods to the US and imports around $45 billion — leaving a gap of $40 billion.I'm sure the US administration will push for India to buy more to help bridge that gap. Likely suggestions will include buying more aircraft from Boeing or more energy products. But the latter might not work, as US energy prices may not be competitive for realistically, buying more aircraft or defense equipment is what's likely. And that's not unreasonable — India does need both. So if those purchases help balance trade, it could be a win-win.