Latest news with #India-UKFreeTradeAgreement
Arabian Post
7 hours ago
- Business
- Arabian Post
After Trump's 25 Per Cent Tariff On Indian Exports, There Is No Cause For Panic
By Dr. Nilanjan Banik Before the August 1 deadline, the U.S. President Donald Trump decided to impose a 25% tariff on Indian exports. He also talked about an additional penalty on Indian exports, which could go up to100% as a surcharge, targeting countries that continue trading oil with Russia. Trump seems to care less about 'friend' India, as trade with India accounts for a much smaller share compared to U.S. trade with China. Because of U.S. interests, China is likely to get a better trade deal than India, for instance removal of restrictions of U.S. chip-design software exports to China. This is not the first time Trump has taken a hard line on India. During his earlier stint at the President not only did Trump label India as the 'tariff king', but he also removed the country from the Generalized System of Preferences (GSP). Under the GSP, established by the Trade Act of 1974, US policymakers allowed imports of around 3,500 products from designated beneficiary countries—primarily low-income nations—at a preferential duty-free (zero-tariff) rate. The aim was to help these countries increase and diversify their trade with the US. According to the World Bank, a 'low-income' country is one with a per capita income of less than $1,045 per year in 2024. As U.S. remains India's largest export destination, it is only natural to feel the pressure with increasingly restrictive trade measures in place. Around 18% of India's total exports are directed to the US, with a value of $77 billion in 2023, and $78 billion in 2024. However, if previous restrictive trade measures, including the withdrawal of GSP, are any indication, then the impact has been relatively modest. A quick review of the items qualified under the GSP reveals that they primarily fall under categories such as textiles and apparel, watches, footwear, work gloves, automotive components, and leather apparel. Among these key export categories, some items within textiles and apparel and automotive components were included in the GSP list. Additionally, exports of organic chemicals, steel, and certain engineering goods—such as nuclear boilers, machinery, and mechanical appliances—were also impacted by the withdrawal of GSP benefits. However, the value of these items as a proportion of total Indian exports to the US is relatively small. India's exports to the US are mainly comprised of diamonds (19%), packaged medicaments (14%), refined petroleum products (8.9%), automotive components (2.1%), and textiles and apparel (3.7%). The percentages in parentheses represent the share of India's exports to the U.S. as a percentage of India's total exports. The recent signing of the India-UK Free Trade Agreement (FTA) is expected to help offset some of the negative effects of excessive tariffs in the long run. Indian policymakers had anticipated a tariff around 20%, but Trump ultimately imposed a 25% rate. Thanks to the India-UK Free Trade Agreement, India stands to benefit from zero tariffs on 99% of its exports, particularly in sectors like textiles, jewellery, pharmaceuticals, automotive parts, and information technology services – areas that commentators fear could be negatively impacted by higher U.S. tariffs. Indian exports to the U.S. are also likely to be less affected in relative terms, since Trump has unilaterally imposed tariffs on countries whose exports compete with India in the U.S. market. For example, Bangladesh (35%), Thailand (36%), Vietnam (20%), Indonesia (19%), Malaysia (25%), and the Philippines (19%) – some of India's competitors in leather, textiles, and machinery – are equally impacted, with the numbers in parentheses indicating their respective tariff levels. To better withstand external shocks — whether from protectionist tariffs or even war — India should focus on making its manufacturing sector/exports more competitive and focus on its domestic economy. The Indian economy benefits from a strong domestic sector, with domestic consumption, government spending, and private investment together accounting for nearly 80% of the country's GDP. However, the contribution of manufacturing value added to GDP remains stagnant at 17%, indicating no significant improvement in manufacturing competitiveness. Foreign Direct Investment (FDI), a key driver of technology transfer and manufacturing competitiveness, is declining, with gross FDI flows dropping to just 1% and net FDI falling to 0.6% in the first half of the 2023-24 financial year—levels not seen since 2005-06. Rigidities in the business environment, the inverted duty structure (IDS), and India's decision to terminate bilateral treaties are to be blamed for discouraging flow of FDI. A study by CUTS International of 1,464 tariff lines across textiles, electronics, chemicals, and metals reveals how the IDS is hurting competitiveness, with 136 items from textiles, 179 from electronics, 64 from chemicals, and 191 from metals most affected. For example, apparel items priced below $14 (Rs 1,000) are subject to a GST of 5%, while those exceeding $14 are taxed at 12%. For textile manufacturers, there are also significant investments required in value-added services such as marketing, warehouse rentals, logistics, courier services, and other fulfilment costs. However, these additional services are subject to a higher GST rate of 18%, making the products less competitive in the international market. The India budget 2025 has addressed the issue of IDS; for example, the government has increased tariffs on Interactive Flat Panel Displays from 10% to 20%, while reducing tariffs on Open Cells and related components to 5%. This trend needs to continue, and policymakers must implement further reforms to enhance the competitiveness of the manufacturing sector. While tariff negotiations is an ongoing process, India could consider strengthening its position by increasing purchases of U.S. oil and defense equipment. During his last tenure, Trump positioned himself more as a major arms dealer, focusing on selling more weapons and oil. India has contracted for nearly $20 billion worth of US origin defense items since 2008. This trend is likely to continue in a potential Trump 2.0. India, for its part, should focus less on tariffs and more on addressing domestic distortions. (IPA Service) (The author is Professor, Mahindra University).
Hans India
a day ago
- Business
- Hans India
US too imposes hefty tariffs across product lines to safeguard domestic industry: Data
New Delhi: The statement by US President Donald Trump that India's tariffs are way too high does not hold water as several nations, including America itself, protect their domestic businesses by imposing high customs duties on products. According to the World Trade Organisation (WTO) data, the US imposes high duties on items such as dairy products (200 per cent), fruits and vegetables (132 per cent), cereals and food preparations (196 per cent), oilseeds, fats and oils (164 per cent), beverages and tobacco (350 per cent), fish and fish products (35 per cent), and minerals and metals (38 per cent). India, on the other hand, imposes 150 per cent on whiskey and wines and 100-125 per cent on automobiles. Japan also levies around 400 per cent duty on rice, Korea 887 per cent on fruits and vegetables, and the US 350 per cent on tobacco to protect domestic industries. While India's simple average tariff is 17 per cent, the actual duties on key American imports are much lower. The weighted average tariff on US exports to India is below 5 per cent. India has already started buying more oil and gas from the US to reduce the trade surplus and has offered to increase these purchases. The country has proposed significant tariff reductions, potentially lowering average duties from 13 per cent to 4 per cent, in exchange for exemptions from US tariff hikes imposed during the Trump administration. According to Mahendra Patil, Founder and Managing Partner, MP Financial Advisory Services LLP, the imposition of a 25 per cent US tariff on Indian exports marks a disruptive moment for sectors such as textiles, gems and jewellery, auto components, and pharmaceuticals. "For India Inc, the immediate priority is to diversify markets, accelerate value addition, and build domestic buffers to better withstand the unpredictability of global trade," he mentioned. The recently concluded India-UK Free Trade Agreement presents a timely opportunity by unlocking stable, tariff-free access to a key market. "This calls for a more nuanced and coordinated fiscal response, such as targeted support to impacted export sectors, faster refund mechanisms, and temporary enhancements to incentive schemes. India must use this moment not only to cushion near-term shocks but to strategically reposition itself in global value chains," said Patil. India remains a domestic-oriented economy with consumption accounting for 60 per cent of the total GDP. On the other hand, merchandise exports accounted for only 12 per cent of GDP in FY24.
Business Standard
2 days ago
- Sport
- Business Standard
Cricket in England series made India proud, says India coach Gautam Gambhir
India head coach Gautam Gambhir said touring England has always been a challenging assignment, but asserted that the quality of cricket in the ongoing series has made "every cricket lover proud. Gambhir was addressing a gathering at the India House on Monday evening to express gratitude for the fans' support during the course of the series, which saw the visitors pull off a dramatic draw in the fourth Test at Manchester. Touring this part of the world has always been challenging because of the history between the two countries, which can never be forgotten, said Gambhir during his speech. Whenever we have toured the UK, the kind of support we have got, we cherish every bit of it. We never take anything for granted. Last five weeks have been really exciting for both countries with the kind of cricket that has been on display, which I'm sure has made every cricket lover proud, he added. The Indian cricket team received a rousing welcome from community leaders, parliamentarians and sports fans at a diaspora reception hosted by the High Commission of India in London, where the squad is set for the fifth and final Test against England at The Oval from Thursday. He went on to highlight the importance of the fifth and final Test, which India needed to win to level the series that now stands 2-1 in favour of England. Both the teams have thrown a lot of punches and have fought for every inch. We have got one more week to go, one final push to make and one more opportunity to make our country and people out here proud, said Gambhir. The players were cheered enthusiastically by the crowd as some of the highlights from their recent games were played out on screen. Vikram Doraiswami, India's High Commissioner to the UK, said the fighting spirit the team showed during the series was a just reflection of the country's will to fight the odds. It's been a great series, played in the best of spirit. But the best bit of it all is the fact that we have a chance to see Test cricket played the way it is intended to be contests for full five days, contests that have gone to the wire, contests in which the great sense of cricket as a game that is played with intensity for five days. And to have our team here display what is truly the range of skills but also the fighting spirit that is now associated with Team India is also a great reflection of the fighting spirit that now stands for the new India that we are all privileged to represent here, said Doraiswami. No matter what happens (in the final Test), we couldn't be more proud of who you (Team India) are, what you represent, where you came from and what you mean to all of us, he said. Richard Gould, chief executive of the England and Wales Cricket Board (ECB), referenced the India-UK Free Trade Agreement (FTA) signed off during Prime Minister Narendra Modi's UK visit last week as a sign of the immense scope of collaboration between the two nations, including sports. In four Test matches so far, every one of them has gone deep into the fifth dayIt's difficult to remember a Test series that has really resounded as deeply as this one has, both in England and back in India, and we are all really looking forward to seeing the battle recommence at The Oval on Thursday, said Gould. The diaspora gathering concluded with a brief in-conversation session moderated by commentator and former head coach Ravi Shastri with a few players including captain Shubman Gill. Before the start of the series, I felt I haven't really shown my best and I was working quite hard on my game before the series as I wanted to prove myself, said Gill, with reference to his over 700 runs notched up during the series so far. It was a very hard-fought game of cricket over the past four days, he added. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
India.com
2 days ago
- Business
- India.com
‘Deals Working Out Very Well': Trump Talks Sweet About ‘Good Friend' India, Hints At Bitter 25% Tariff
Washington: Inside the humming cabin of Air Force One, President Donald Trump leaned back and spoke to reporters as casually as one might comment on the weather. But his words carried weight, especially for India. With just a couple of days left before an August 1 deadline, he said things between Washington and New Delhi were 'working out very well'. But at the same time warned tariffs as high as 20% to 25% might be on the way. He did not make the comment out of nowhere. A reporter had asked about whispers from New Delhi that India might be bracing for steep new duties. Trump shrugged off the speculation but made his stance clear. 'India has charged basically more tariffs than almost any other country over the years. But now I am in charge. And you just cannot do that,' he said. Though there has been no formal communication to India so far and no signed letter like those sent to other nations, the possibility of new tariffs is very much on the table. Despite the tense undertone, Trump called India 'a good friend'. Back in April, the Trump administration had already slapped a 26% tariff on Indian imports, only to hit the brakes later, describing them as 'reciprocal' measures that could be revisited. On the Indian side, the mood has been more optimistic. Speaking this past Sunday, Commerce Minister Piyush Goyal said India is negotiating from a position of strength. 'India today negotiates from a position of strength, a position of confidence. It is this very confidence that continuously encourages us to make good free trade agreements. Our discussions with the United States are progressing very well,' he said. Foreign Secretary Vikram Misri echoed similar confidence during Prime Minister Narendra Modi's recent trip to the United Kingdom. He told the media that India is in regular touch with U.S. officials on the possibility of a Bilateral Trade Agreement (BTA), though those talks are being handled under a separate track. 'We are discussing that under a different vertical. All I can say is that our engagement is underway. The contacts are underway, and we will see how that goes,' Misri said after the India-UK Free Trade Agreement signing ceremony. Back on July 14, a senior Indian official said the government was moving ahead with 'concrete progress' on the BTA with Washington, describing the deal as something both nations are committed to finalising under the leadership of Modi and Trump. India's goal? A win-win deal. 'We are moving in terms of a BTA. We are looking at a mutually beneficial deal,' the official said. But trade was not the only card Trump played in the air that day. He also took a moment to reflect on what he called his role in halting the conflict between India and Pakistan earlier this year. The standoff began after the April 22 terror attacks in Pahalgam, which claimed 26 lives. India's response, now widely discussed Operation Sindoor, involved targeted precision strikes on nine terror camps in Pakistan and Pakistan-occupied Jammu and Kashmir. Trump claimed he had helped broker the peace. 'Look, India, they are my friends and he is (PM Modi) my friend. And you know they ended the war with Pakistan and by request and I was great and Pakistan did also. We did a lot of great settlements,' he said. India, however, had offered a different version of events. According to New Delhi, it was Pakistan's Director General of Military Operations who made the first move and reached out to his Indian counterpart to ask for a ceasefire. Only then did hostilities ease. Whether Trump's version holds up or not, trade and geopolitics are once again tied together, with India and the United States carefully maneuvering, with each step being closely watched. (With ANI inputs)
Time of India
3 days ago
- Business
- Time of India
India-UK FTA a big step forward, will help businesses grow: JK Paper CMD Harsh Pati Singhania
New Delhi: Welcoming the India-UK Free Trade Agreement (FTA), Harsh Pati Singhania , Chairman and Managing Director of JK Paper , has said it is a big step forward for businesses and strengthens economic ties between the two countries. He said the deal will boost business growth, enhance confidence among Indian companies, and bring relief to Indian professionals working in the UK by addressing issues related to the social service tax. 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This will help our businesses grow and increase our confidence. Another significant thing is that the people who go to work in the UK for 2-3 years will not suffer anymore because of the social service tax. It is a very big step forward," Singhania said. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Car Finance Between 2007–2020? You May Be Entitled to a Refund. Check Now. My Car Loan Claims Learn More Undo India and the United Kingdom took a big step last week in building a stronger economic partnership with the signing of the Comprehensive Economic and Trade Agreement ( CETA ). The agreement was signed by Commerce and Industry Minister Piyush Goyal and UK Secretary of State for Business and Trade, Jonathan Reynolds in the presence of the two Prime Minister Narendra Modi and his UK counterpart Keir Starmer Live Events The FTA marks a significant milestone in India's engagement with major developed economies and reflects a shared commitment to strengthening economic integration. As the world's fourth and sixth largest economies respectively, India and the UK's bilateral engagement holds global economic significance. The signing of the India-UK CETA follows the successful conclusion of negotiations announced on 6th May 2025. The bilateral trade between the two countries stand at nearly USD 56 billion, with a joint goal to double this figure by 2030. CETA secures unprecedented duty-free access for 99% of India's exports to the UK, covering nearly the entire trade basket. This is expected to open new opportunities for labour-intensive industries such as textiles, marine products, leather, footwear, sports goods, toys, and gems and jewellery, alongside fast-growing sectors like engineering goods, auto components, and organic chemicals. The services sector, a strong driver of India's economy, will also see wide-ranging benefits. The agreement provides greater market access in IT and IT-enabled services, financial and legal services, professional and educational services, and digital trade. Indian professionals, including those deployed by companies to work in UK across all services sectors, professionals deployed on contracts such as architects, engineers, chefs, yoga instructors, and musicians, will benefit from simplified visa procedures and liberalised entry categories, making it easier for talent to work in the UK. The two countries had in May announced the successful conclusion of a mutually beneficial FTA.
