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Business Recorder
25 minutes ago
- Business
- Business Recorder
US trade diplomacy
Pakistan, under the 'euphoria of triumph', swiftly walked out, having made a deal with the United States with 19 percent US tariffs on its exports. This drew comparison with India — still embroiled in tariff conflict with US with no settlement in sight. Nevertheless, the comparison is not realistic. India got on the wrong side of Donald Trump who reprimanded it for supplying cheaper procured Russian oil to Europe at a high premium, thereby fuelling the Ukraine war. Additionally, India's engagement with BRICS, as its founding member, is looked upon with suspicion by the Trump administration. Whereas, historically, India's case stems from longstanding trade tensions: data localization rules, price caps on pharmaceuticals, and high tariffs on US imports — specially on its automotive industry. Pakistan, in contrast, has no such baggage. It does not restrict American tech firms, nor does it block market access. The flat 19 percent US tariffs are being quietly absorbed by Pakistan's export sector but should not be overlooked by policymakers. While this is a reduction from the earlier proposed 29 percent tariffs — ironically for Pakistan's struggling exporters, the difference between 19 percent and 29 percent is merely academic when compared to the 0-8 percent range they previously operated under — especially for core products like textiles, surgical goods, and sports equipment. The country's exporters, particularly small and medium enterprises (SMEs), operate on razor-thin margins. With rising energy costs at home and political instability feeding currency volatility and a country fighting for every export dollar, this is not an encouraging development. These blanket tariffs erode Pakistan's competitiveness, particularly in labour-intensive and price-sensitive sectors such as textiles, surgical instruments, sports goods, and leather products. These sectors are economic engines and critical to employment, particularly in vulnerable regions across Punjab, KP, and Sindh. Pakistan uncompetitiveness could reroute US buyers toward countries like Bangladesh, Jordan, Vietnam, or even Mexico, many of whom enjoy more favourable trade terms through Free Trade Agreements (FTAs) or GSP+ schemes. To preserve a healthy trade relationship and support Pakistan's economic stability, an optimal and friendly tariff would fall between 0 percent and 5 percent, at least for priority export categories like textiles and garments, surgical instruments and medical devices, sports goods, leather products and IT services (via digital trade facilitation). This would mirror the preferential access already offered to other developing or strategic allies. The US has mechanisms for this — whether through restoring GSP benefits, or negotiating product-specific concessions under bilateral economic frameworks. Pakistan has long been a strategic ally during the Cold War and the war on terror; more recently, the countries have made efforts aimed at obtaining regional stabilization. That alliance should be reflected in trade policy, not just security dialogue. This 19 percent tariff may seem like a routine trade adjustment, but its implications are far-reaching at a time when Pakistan's economy can least afford it. Political goodwill, unless translated into economic terms, quickly turns into irrelevance. It is now a time for proactive trade diplomacy. Copyright Business Recorder, 2025
India.com
3 days ago
- Business
- India.com
‘Tariff King'? The U.S. Got It Wrong – India's Trade Duties Tell A Different Story
New Delhi: U.S. President Donald Trump recently branded India as the 'tariff hing', accusing it of abusing trade duties to shield its markets. But actual trade data paints a vastly different picture. According to the World Bank, India's simple average tariff sits at 15.98%, but its trade‑weighted average, reflecting what most imported goods actually face, is only 4.6%. The lower rate reflects the reality that most high tariffs apply to low‑volume sectors such as agriculture or automobiles, while major imports like pharmaceuticals, energy, machinery and chemicals face much lighter duties (typically 5‑8%). India's imports from the United States in FY 2023‑24 totaled over $42.2 billion, with roughly 75% concentrated in just 100 product lines. Those goods generally attracted low or minimal tariffs. For instance, crude oil and LNG carry a duty of Rs 1.10/tonne and 2.75%, accounting for 18.25% of U.S. imports to India. Industrial machinery draws a 7.5% tariff; coal faces 5%; medical equipment carries 5‑7.5%; aircraft and parts are charged only 2.5%; and fertilizers go up to 10%. Thank you to schemes like Special Economic Zones, Export‑Oriented Units and Free Trade Agreements, a fair share of imports enters duty‑free. India has also been gradually reducing tariffs over three decades, from 80.9% in 1990 down to 15.98% in 2023, with the weighted average at just 4.6%. In January of this year alone, India slashed duties on several U.S. exports such as motorcycles, bourbon whiskey, ethernet switches, synthetic flavourings, fish hydrolysate and abolished a 6% equalisation levy on online services. It also removed retaliatory tariffs on apples, almonds and walnuts. Global comparisons reinforce India's position as moderate, not excessive. The Word Trade Organisation (WTO) data shows India imposes 0% on most semiconductors and IT hardware, compared with Vietnam's 50%, China's 25% and Indonesia's 30%. On agricultural tariffs, India averages 33% (with a max of 110‑150%) versus the European Union (EU)'s cap of 261%, Japan's 298% and South Korea's over 800% on certain items. Neighboring economies fare similarly: Bangladesh at 14.1%, Turkiye at 16.2%, Argentina at 13.4%. India's trade‑weighted rate remains lower than Vietnam's 5.1% and Indonesia's 5.7% and is nearly equal to the EU's 5%. India's non‑tariff barriers remain modest and predictable. Its Maximum Residue Limits (MRLs) for food products meet or exceed Codex norms in 24 out of 32 cases, compared to Japan and EU standards. Rules around biotech and veterinary certifications follow science‑based global norms. Contrast that with China's more opaque system of over 2,600 non‑tariff measures, many of which pose challenges for exporters. Meanwhile, the United States maintains steep tariffs on products like sour cream (average 197%, max 297%), tobacco (average 184%, up to 350%) and peanuts (average 115%, up to 164%). Even cheese tariffs hover near 24% and automobiles average 19%. India's approach, particularly in agriculture, reflects common international practices aimed at protecting farmers and ensuring food security. Judged by global norms, its tariff strategy aligns more with calculated trade policy than protectionism. The label of 'tariff king' obscures more than it reveals. India appears far from an outlier. It has phased in trade liberalisation consistently. It negotiates tariff relief for key partners. It removes barriers when possible. Its tariff profile compares favorably even with developed participants in global commerce. India is not a tariff miser. India is a measured trader.
NDTV
3 days ago
- Business
- NDTV
India Is Not A "Tariff King": US Claims vs Reality
US President Donald Trump has labelled India as the "Tariff King" and an "abuser" of trade duties, suggesting the country unfairly protects its markets through high customs duties. But a closer look at the facts reveals the claim doesn't hold up against actual trade data and global comparisons. While India's simple average tariff is approximately 15.98%, the trade-weighted average, which better reflects the duties actually applied on traded goods, is only 4.6%, as per World Bank data, much lower than what is commonly believed. Simple vs Weighted Average Tariffs Simple Average Tariffs give equal weight to every product, even those hardly traded. Trade-Weighted Average Tariffs measure the actual duties paid based on trade volume. In India's case: Simple Average Tariff: 15.98% Trade-Weighted Average Tariff: 4.6% This means that most of India's high tariffs apply to sectors with low import volumes, such as agriculture or automobiles. In contrast, the bulk of US exports to India - pharmaceuticals, energy products, machinery, and chemicals - face much lower duties, typically 5-8%, as per official data. A significant portion of India's imports enter duty-free, thanks to various schemes like: Special Economic Zones (SEZs) Export-Oriented Units (EOUs) Free Trade Agreements (FTAs) India's Actual Tariffs On US Goods In FY 2023-24, India imported over $42.2 billion worth of goods from the United States. Nearly 75% of this trade came from only 100 key product categories, and most of these faced low or minimal tariffs. Examples - Crude Oil and LNG: Import duty of Rs. 1.1/tonne and 2.75%, accounting for 18.25% of US imports to India. Industrial Machinery: Tariff of 7.5%, making up 9.75% of imports. Coal: 5% duty, contributing to 8.8% of imports. Medical Equipment: Duties between 5% and 7.5%, with a 4.6% import share. Aircraft and Parts: Low tariff of 2.5%, with 3% of total imports. Fertilisers: Tariff ranging from 7.5% to 10%, making up 1% of imports. Compared To Other Countries When stacked against other countries, both developed and developing, India's tariffs are far from extreme, sources say. As per data from the World Trade Organisation: Electronics And Technology India: 0% on most semiconductors, IT hardware, and computers Vietnam: Up to 50% China: Up to 25% Indonesia: Up to 30% Agricultural Products India: Average 33%, max up to 110-150% European Union: Up to 261% Japan: Up to 298% South Korea: Over 800% on some items While India's simple average tariff stands at 15.98%, as per the WTO, this figure is well within the range of tariffs maintained by other developing nations. For instance: Bangladesh: 14.1% Turkiye: 16.2% Argentina: 13.4% By this measure, India's weighted average is just 4.6%, which is: Lower than Vietnam (5.1%) and Indonesia (5.7%) Nearly equal to the European Union (5%) India Has Been Reducing Tariffs For Decades In 1990, India's average tariff was as high as 80.9%. Following economic reforms in the early 1990s, tariffs were gradually reduced, falling to 33% by 1999. By 2023, India's simple average tariff dropped further to 15.98%, while the trade-weighted average stood at 4.6%. In January, India implemented extra tariff cuts on key US products: Motorcycles above 1600cc: reduced from 50% to 30% Motorcycles up to 1600cc: cut from 50% to 40% Bourbon whiskey: slashed from 150% to 100% Carrier-grade Ethernet switches: halved from 20% to 10% Synthetic flavouring essences and mixtures: steeply reduced from 100% to 20% Fish hydrolysate: lowered from 15% to 5% Equalisation Levy on online services: 6% levy abolished after last year's removal of an additional 2% - significant for the US tech firms In 2023, India removed retaliatory tariffs on major US agricultural exports like apples, almonds, and walnuts after resolving trade disputes. High-tech goods and solar equipment have seen reduced or zero duties in line with India's strategic green energy and digital transition goals. Crucially, major US exports like aircraft and LNG continue to enjoy a low duty regime, facilitating over $5 billion in annual trade. These reductions reflect not only India's broader trade liberalisation over the decades, but also a calibrated effort to strengthen economic ties with the United States through deliberate tariff concessions. India's Non-Tariff Barriers India's regulatory and safety standards are generally less restrictive than those of countries like the EU, Japan, or China. India's Maximum Residue Limits (MRLs) for food products are either matching or less stringent than international Codex standards in 24 out of 32 cases, compared to only 15 out of 52 MRLs in Japan and 6 out of 58 in the EU, as per sources. India's rules on biotech products and veterinary health certification are designed to be transparent, science-based, and consistent with global norms. In contrast, China has over 2,600 non-tariff measures (NTMs), many of which are complex, unpredictable, and create difficulties for foreign exporters, sources said. US Tariffs The United States itself imposes very high duties on several important products. These tariffs, many exceeding 100% are applied across a range of products, including dairy, agriculture, textiles, and autos, reflecting deep-rooted domestic concerns similar to those seen in countries like India. Developed countries like Switzerland (28.5%), Norway (31.1%), and South Korea (57%) also maintain very high agricultural tariffs, often exceeding India's levels, underscoring that protecting agriculture is a global norm. India's tariff policy, especially in agriculture, is thus in line with international norms aimed at safeguarding domestic farmers and ensuring food security, sources said.
Time of India
7 days ago
- Automotive
- Time of India
Volvo India's gear shift: Changes EV-only plan; ICE models to stay amid slow uptake
Volvo Cars India has revised its earlier strategy of transitioning to an all-electric portfolio, opting instead to continue selling both electric and internal combustion engine (ICE) vehicles in the country. Tired of too many ads? go ad free now currently account for around 25% of Volvo's sales in India. However, the market for premium battery electric vehicles (BEVs) remains small, although the company notes signs of recovery in the last six months following a slump a year ago. The decision comes after companies' previous claims to phase out ICE models entirely. Volvo Cars India, managing director Jyoti Malhotra, speaking to Economic Times, said 'The adoption rate (of electric vehicles) is different in different countries. And even within the country (in India), it's different across states.' 'We will continue to drive in electric cars and have a launch lined up later this year itself. But at the same time, we will continue to focus on ICE,' he added. Volvo had announced plans to go fully electric by 2030 globally, but the timelines have now been extended. 'About a year back, EVs had started losing steam. We are seeing some uptick in the segment in the last six months. But customer needs are different across regions,' said Malhotra. He pointed out that state policies and infrastructure play a pivotal role in EV adoption. States like Kerala, Maharashtra, and Delhi have favourable tax regimes and more low-rise housing, are seeing better uptake, compared to cities dominated by high-rises, where home charging is a challenge. India currently levies a Goods and Services Tax (GST) of 5% on EVs, while hybrids attract a much steeper 43%. Tired of too many ads? go ad free now Volvo offers plug-in hybrids in international markets, but Malhotra clarified that Indian launches would depend on more favourable tax regime. The company is preparing to introduce a new electric model later this year but will simultaneously retain focus on ICE vehicles to cater to diverse market needs. Volvo's shift aligns with similar moves by global peers such as Jaguar Land Rover and Mercedes-Benz, who are reassessing their timelines for a fully electric portfolio amid similar market realities. Industry data shows that around 22,900 luxury vehicles were sold in the first half of 2025, marking a modest 1.8% increase year-on-year. He also welcomed India's ongoing negotiations around Free Trade Agreements (FTAs), noting their potential to boost the auto sector. 'The UK FTA has set a benchmark. While the one with the EU is still some time away, free trade agreements are good for the economy,' he said.
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Business Standard
7 days ago
- Business
- Business Standard
Navigating US tariffs: Strategic responses for building resilience
The US decision to impose an additional 25 per cent tariff on Indian goods—over and above the standard Most Favoured Nation (MFN) rates—is likely to make India's exports less competitive in the US market. Estimates suggest approximately 30 per cent of Indian exports, valued at $87 billion, and spanning sectors such as gems and jewellery, engineering, auto parts, textiles and apparel, leather, handicrafts and carpets will be affected. This move is expected to have a detrimental impact on production and employment across these industries in India. While one hopes for a more positive outcome to the negotiations that are likely to continue later this month, a strong need exists for us to build on alternative strategies that support growth, investments and employment. Hence, while the higher tariffs for US markets are a big economic challenge, they also create opportunities for innovative solutions that may take India on a higher growth trajectory. Export-market diversification: One clear strategy to offset the potential loss of trade earnings from the US market is to diversify India's export destinations. In this context, there are significant opportunities to step up our exports to alternative markets. Africa, for instance, is emerging as a fast-growing destination for India's pharmaceuticals, textiles, digital services, electrical and auto products, as well as agricultural and clean tech goods. Already at about $83 billion, India and Africa have set an ambitious goal of scaling bilateral trade to $200 billion by 2030. At the same time, expanding exports of gems & jewellery, as well as textiles & garments to the energy-rich economies in the Middle East and Central Asia presents another viable avenue. Trade agreements and Free Trade Agreements (FTAs) also offer scope for broadening India's export reach. Trade deals: The recently concluded FTA with the UK, along with the ongoing negotiations with EU – which are expected to conclude soon – offer significant opportunities to expand market access for Indian products. Early finalisation of FTAs with Canada and Australia, both major export destinations, would further help diversify India's trade portfolio and reduce overdependence on a limited number of markets. Additionally, expediting FTA with Gulf Cooperation Council (GCC) and pursuing a renegotiation of the existing FTA with ASEAN would provide a much-needed boost to India's trade strategy. Regional economic and tech integration: Another low-hanging fruit is strengthening regional trade ties and regulatory standards within the grouping of Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). Working with neighbourhood countries of Bhutan, Bangladesh, Nepal, Myanmar, Sri Lanka, and Thailand, would give a fillip to agricultural exports, besides to pharmaceuticals, textiles and garments, engineering goods, electronics, etc. In this context, India's leadership in scaling up the Unified Payments Interface (UPI) for cross-border financial settlements could be a game changer for regional trade. When coupled with enhanced regional connectivity projects, infrastructure development would be well-positioned to emerge as a key growth engine for the region – catalysing a virtuous cycle of investments, economic activity, employment and consumption across the region. Strength of services sector: Importantly, services are less vulnerable to tariffs and India remains a major global exporter in this domain - currently ranked seventh worldwide. IT and IT-enabled services constitute an estimated 50 per cent of India's services exports, followed by business services, medical and education tourism, transport, and logistics related services. To sustain and enhance this momentum, the development of high-value exports by Indian IT firms, particularly in areas such as Artificial Intelligence (AI), Machine Learning, cybersecurity, cloud-based solutions, and other innovation-driven software development, is imperative. This is also an opportune time to strengthen exports of telemedicine and online education through edtech platforms, promote greater medical tourism, and attract international visitors especially from Southeast Asia, Japan, S Korea, China, to culturally important destinations such as the Buddhist circuit. Value-addition in GCCs: An important offshoot of services sector exports is the growing contribution of Global Capability Centres (GCCs), which could play a key role in mitigating the adverse impact of higher tariffs. India has emerged as a global hub for GCCs, which are offshore units established by multinational corporations to carry out strategic business functions in a cost-effective and efficient manner. These functions range from R&D and product development to innovation in technologies and components. Attracted by India's young, English-speaking, and highly skilled workforce, more than 1,900 GCCs are currently operating in the country. Continued focus on enhancing value addition within these centres—particularly in IT-led innovation and cutting-edge areas such as AI—could contribute over $100 billion worth of innovative products and services by 2030. Global supply chains: Attracting greater investment into global supply chains remains a critical strategy to counter potential trade losses in the US market. This requires further regulatory easing under the Ease of Doing Business (EODB) framework, especially through targeted partnerships with industrialized Indian states. Strategic collaboration with member countries of the Indo-Pacific Economic Framework (IPEF) on supply chain alignment—particularly by engaging with the top 50 global multinationals—will also be essential. Integrating with global supply chains will help to build a domestic ecosystem of high-value manufacturing and exports, thereby giving India an edge in global markets. Overview: In conclusion, while the outcome of our negotiations with US is still evolving, it seems to be a defining moment for the country to expand its trade markets, focus on the FTAs to establish alternative yet stable markets for our export products, strengthen regional trade and connectivity – both financial and infrastructural. Besides, it is an opportune time to incentivise corporates to move up the value chain, and build domestic capacity for higher value-added goods, whether they be in electronics, pharma, biotech, fintech, AI-driven products, or green tech-based products. Continued growth in the services sector, along with policy reforms to attract global supply chains, will be critical components of the blueprint for transforming the Indian economy toward a higher-growth, higher-employment trajectory.
