US revises tariff on India downwards from 27% to 26%; exporters cries foul.

The United States has revised downwards the import duties to be imposed on India by reducing from 27% to 26%, according to a White House document. These duties will come into force from April 9^th.

While announcing the reciprocal tariffs against different countries on Wednesday, President Donald Trump had held up a chart that showed the tariffs that countries such as India, China, the UK, and the European Union will now have to pay.

The chart indicated that India charged 52% tariffs, including currency manipulation and trade barriers, and America would now charge India a discounted reciprocal tariff of 26%. Earlier, the White House documents showed a 27% duty on India. However, industry experts reserved their opinion that 1% would not have much of an impact.

On the other hand, Industry leaders in Gujarat have said the US government’s decision to impose reciprocal tariffs on Indian imports will adversely impact the gems and jewellery industry, but will not affect the pharmaceutical, textile and agro-chemical sectors much.

Former Gujarat regional chairman of the Gem and Jewellery Export Promotion Council (GJEPC), Dinesh Navadiya, said that the new tariffs on imports will hurt India’s exports to the US. “In 2023-24, India’s gems and jewellery export to the US was USD 9.95 billion. With an annual sale of USD 89.54 billion, the US is the world’s biggest market of diamonds and diamond jewellery. The new tariffs will increase the prices of our products in the US and it will eventually affect our exports to that country“. From 0% tariffs on polished diamonds, the US has now imposed a steep 27 per cent duty. Similarly, duty on gold jewellery has been hiked from the current levels of 5 to 7% to nearly 32%, Navadiya said.

Gujarat being the biggest centre for cutting and polishing diamonds, will be affected by the new tariffs – resulting in a catastrophic impact on the exports because products will become expensive in the US, which may lower the demand.

Pramod Chaudhary, a leading textiles manufacturer from Surat, said although the US has increased import duty on Indian textiles, it will not make a significant impact on local manufacturers because the products are largely meant for the domestic market while the export is very less. “Moreover, textiles are first exported to Bangladesh and South American countries for making garments, which are then exported to the US. New taxes on India and other countries that buy Indian textile to make garments may leave a negative impact on the exports but I am hopeful that the industry will get prepared to overcome the shortcomings“, he said.

According to former president of Gujarat Chamber of Commerce and Industry (GCCI), Natubhai Patel, the Indian chemical industry would benefit from the Trump administration’s tariff policy because many Indian products, such as pigments for making white, blue and green colours, have been exempted.

Two main colour pigments exported to the US by India — copper phthalocyanine (for making blue and green paints and dyes) and titanium dioxide (for making white colour) — have been exempted from the new tariff regime by the US. On the other hand, the US has imposed tariffs on China-made pigments. Thus, the new tariff regime of the US will help Indian manufacturers as we will have an edge over Chinese products.

Viranchi Shah, spokesperson of Indian Drug Manufacturers Association (IDMA), said the US has exempted India’s pharma sector from the new tariff regime. “Import tariff on Indian medicines was 0% in the past and there is no change in that policy by the US. This might be the result of our medicine diplomacy. We did a commendable job during COVID-19 by supplying vaccines to the world. This exemption also establishes that our future in pharma export is bright“, Shah said.

Team Maverick