INDIAN EXPORTERS WARY OF TRUMP’S TARIFF THREAT
Traders across export-focused sectors with a significant business presence in the US are apprehensive of growing noises from Washington DC for higher import tariffs. Exporters of diamond jewellery, pharmaceuticals and marine products, for which India’s export exposure with regard to the US remains far higher than steel and aluminium exports, are keeping their fingers crossed.
US President Donald Trump recently said he would impose stiff tariffs on imports of steel and aluminum, drawing global backlash, with several countries vowing to retaliate.
The US alone consumes about 30 per cent of India’s annual jewellery exports and 40 per cent of shrimps and prawns. SUBHAYAN CHAKRABORTY,
DILIP K JHA, NIRMALYA BEHERA
& VEENA MANI write
Traders across export-focused sectors with a significant business presence in the United States are apprehensive of growing noises from Washington DC for higher import tariffs.
Exporters of diamond jewellery, pharmaceuticals and marine products, for which India’s export exposure with regard to the US remains far higher than steel and aluminium exports, are keeping their fingers crossed.
US President Donald Trump recently said he would impose stiff tariffs on imports of steel and aluminum, drawing global backlash, with several countries vowing to retaliate.
The US alone consumes about 30 per cent of India’s annual jewellery exports and 40 per cent of shrimps and prawns. About 40 per cent of all pharma exports also end up stateside. The US is India’s largest export destination, with $42.21 billion worth of shipments sent to that country in 2016-17.
“We will be meeting with Commerce Secretary Rita Teaotia and other top officials of the ministry tomorrow (Wednesday) to discuss the US issue,” said Ganesh Kumar Gupta, president of the Federation of Indian Export Organisations.
While China has mostly been on the receiving end of Trump’s trade barbs, Trump raised last week the issue of Harley-Davidson attracting “unfair” import taxes in India. If the Trump administration decides to pursue country-specific tariff hikes on industrial and consumable commodities, its disastrous impact could first be felt on India’s diamond jewellery exports, worth $40 billion.
Diamonds may not be forever
The jewellery demand from the US sets the tone for the rest of the world and indirectly contributes a lot towards India’s overall export growth in the sector, according to traders.
“Trump has not talked anything about jewellery. But any country-specific import duty or increase in the existing tax could be disastrous for diamond jewellery exports,” said Praveen Shankar Pandya, former chairman of the Gems and Jewellery Export Promotion Council.
Currently, processed non-industrial diamonds, for which the US is the largest overseas market, attract nil duty there. India’s processed diamond exports to the US were valued at $7.36 billion during 2016-17, or about 30 per cent of the overall diamond exports that year. On the other hand, India’s export of diamond-studded gold jewellery worth $1.42 billion for 2016-17 attracted 5.8 per cent import duty.
“No country in the world today takes a country-specific decision on import duty, unless the exporting nation indulges in unfair trade practices. Hence, Trump is unlikely to take any such decision either. In case he does, the impact would be severe on the Indian diamond processing industry,” said Pandya. While some underdeveloped countries have been given preferential treatment under the World Trade Organization guidelines, India’s position as the fastest-growing economy excludes it from this category.
Banking on cheap drugs for Americans
Pharma majors seem more confident and prepared. “Indian generics constitute 30 per cent of what American consumers use. Import duties will not affect exports as people will continue to use these medicines, and the US will continue to be a major market,” said S Veeramani, former president of the Indian Drug Manufacturers Association.