2 days ago
India seeks to boost local brands as higher US tariffs loom
Question: With the US administration levying across the board 25 per cent tariff, and additional penalty of 25 per cent, on all Indian origin goods, will the government be inclined to give subsidies to exporters?
ANSWER: Instead of providing subsidies, the government is pushing Indian exporters to build and promote brands as branded products command a value which affluent American consumers may be willing to pay for. The brand promotion exercise would be undertaken jointly by export promotion councils and the India Brand Equity Foundation. Incentives may be given under an employment-linked scheme for certain industries such as those dealing in leather and marine products. This would benefit both the domestic and export sectors as a result of higher production and lower costs, thereby mitigating the effect of the increased tariff rate. While some countries competing with India enjoy a lower rate of tariff, they may not be able to create adequate capacities immediately to meet the shortfall and therefore Indian goods will continue to meet the demand in the United States.
Lower cost of credit on account of an interest equalisation scheme for pre- and post-shipment export credit will also blunt the tariff hike. Around 25 per cent of goods exported will be outside the ambit of tariffs. Pharmaceutical goods, petroleum products and electronics are not covered by the higher tariff. Likewise, semiconductors, smart phones and electronic products are not affected. Some Indian manufacturers are likely to shift their production lines to the UAE from where goods would be exported to the United States which would attract the baseline tariff rate of 10 per cent.
Question: Are adequate steps being taken in India to develop the cloud market for storing data applications and infrastructure?
ANSWER: Indian companies in the private sector are gaining strength to challenge bigger global rivals in the fast growing cloud market. They are able to take on foreign hyperscalers by positioning themselves as affordable and secure alternatives with cost savings of 30 per cent to 50 per cent compared to the large international cloud providers. Hyperscalers are large cloud providers having massive computing resources with related infrastructure and offer free cloud credits and start up support. Indian companies are rapidly building technical sophistication, security credentials and operational scale to effectively compete with established global platforms.
The Indian government is encouraging companies to provide cloud solutions for ensuring compliance and security of core applications and data, especially to enterprises in the banking, financial services and insurance space. Global hyperscalers have grown their footprint in India by entering into agreements with mobile phone operators for development of affordable cloud-based solutions. These are widely used by startups and small and medium enterprises which have been slow in moving to sovereign cloud on account of high costs and risks associated with migrating applications which are time consuming and cause business disruptions. Currently, the cloud market revenue in India stands at $8.3 billion.
Question: Gold prices have shot up in India in the last one year, as well as internationally. Will this affect purchase of gold ornaments which will be in demand in the festive and wedding seasons?
ANSWER: The demand for gold is certainly muted due to rising prices, as evident from the figures for the first quarter April-June of this financial year. According to estimates of the World Gold Council, the rising price of gold has impacted jewellery consumption with demand falling by 17 per cent year-on-year to around 89 tonnes in this quarter. However, according to their estimate, the high price of gold has boosted the demand on the investment front, an increase of 7 per cent year-on-year. Thus, there seems to be a strategic commitment among investors to purchase gold as a long term store of value.
The projected demand for the current year is estimated at 600 to 700 tonnes. Gold prices have been highly volatile due to multiple factors, including geo- political uncertainties, and the price of the metal in India crossed100,000 for 10 grams on April 22, 2025, though subsequently it has come down. Gold recycling has remained at a modest figure of 1 per cent, indicating that consumers and investors are holding on to their assets with confidence in its true intrinsic value.
HP Ranina is a practising lawyer, specialising in corporate and fiscal laws of India.
