India-US Tariff War: How much will the US' 50% tariff affect India? Commerce Ministry's statement

India-US Tariff War: The recent US decision to impose tariffs of up to 50% on certain products exported from India has created an atmosphere of concern among Indian industries and policymakers. The central government has described the situation as "serious but under control" and said it is looking at it as an opportunity. This article analyses the impact of the decision, the response of industries, and the government's strategy.

Affected sectors and their challenges

According to a senior commerce ministry official, the immediate impact of the tariffs will be on key export sectors such as textiles, chemicals, and machinery. These industries have already anticipated problems such as a reduction in orders, liquidity crisis, and financial pressure. Small and medium enterprises (SMEs), in particular, may be the worst affected by this situation, as they have limited flexibility in their cost structure and global competitiveness.

Industries say that tariffs will increase production costs, which may reduce their competitiveness in the global market. In addition, supply chain disruptions and uncertainty may also increase. However, the government has not considered this situation to be harmful from a long-term perspective, provided appropriate policy steps are taken.

Government response and strategy

The central government has started taking quick steps to control the situation. Taking seriously the suggestions of the affected exporters, the government has focused on short-term relief and long-term solutions. The following steps are being taken under this:

1. Export Promotion Mission

The Commerce Ministry has decided to speed up the Export Promotion Mission. Under this mission, exporters will be provided support through financial assistance, tax relief, and structural reforms. Its aim is to make Indian products more competitive in the global market.

2. Strengthening the supply chain

The official has described this situation as a "warning signal" and emphasized on making the supply chain more resilient and self-reliant. For this, the government is taking steps like exploring alternative markets, increasing local availability of raw materials, and promoting digital logistics.

3. Focus on domestic demand

The government official stressed that India's expanding domestic market can act as a buffer in this crisis. GST reforms have led to an increase in local demand, making it possible to consume stocks that cannot be exported within the country. This strategy can be particularly useful for sectors such as textiles and chemicals.

Trade talks: Strategy to proceed with caution

Progress is expected in the ongoing bilateral trade talks with the US, but the government has decided to avoid haste. The Commerce Ministry says no trade agreement will be effective without resolving the 25% additional duty. Therefore, priority is being given to reducing or removing tariffs. This strategy is important to provide immediate relief to India's exporters and strengthen long-term trade relations.

Long-term opportunity

While this situation is challenging in the short term, it also provides an opportunity for India to reorient its economic policies and global trade strategy. Following are some of the potential opportunities:

• Exploring new markets: Boosting Indian exports to markets such as Europe, South-East Asia, and Africa apart from the US.
• Atmanirbhar Bharat: Strengthening local production and supply chains will increase the ability to withstand global shocks.
• Innovation and technology: Investments in digital and sustainable technologies can increase global demand for Indian products.