India may roll back higher import duties on US items

India may roll back higher tariff sit announced last week on imports from the US if talks on the matter, scheduled to be held in Washington, DC nextmonth, prove fruitful. The government is also hopeful of securing exemption from the Trump Administration regarding steel and aluminium tariffs, which had been imposed earlier by the US against all tradepartners.

Last week, India finally imposed higher tariff rates on 29 import items from the US, aimed at ra king in $240 million worth of duties through higher tax up to 100 percent. However, the government hinted otherwise on Thursday, wrapping up the three-day-long discussions with senior US officials led by US Trade Secretary Mark Lin scott.

“The implementation of the tariff hike is from August 4 and we are hopeful of resolving the issue before that ,” a senior commerce department official said. Earlier this month, India had last week notified the World Trade Organization( W TO) of its decision to impose ‘reciprocal tariffs’ on American products. New Delhi had justified the move after getting the cold shoulder from Washington, DConits request for exempting India from the higher tariffs announced by the US on steel and aluminium imports.

However, sources suggested that Washington, DC may accede to the demands on exemption from the tariffs as exports to the US in the category remain small. Steel shipments to the US are about 3 percent and aluminium exports are slightly higher than 14 percent of total out bound shipments of both products.

“Any country which notifies W TO has the right to withdraw or def er the said notification. So, the discretion is with us ,” the official added. India’ s list of tariffs targeted agro commodities such asapples, walnuts, and almonds, for which the US remains the largest source of inbound shipments. Interestingly, the list also includes as many as 18 iron and steel items, a potent political reply against Trump’ s tariff hikes. Trade experts say the move was warranted owing to Donald Trump’s tactics. “I strongly feel that if you do not respond adequately, you cannot get someone to come to the negotiating table. The US has not respected the multilateral system recently, but if it feels the tariffs are unjust it should go to the WTO,” Biswajit Dhar, trade expert and professor at the Jawaharlal Nehru University, said.

But others remained cautious. “This increase will be in addition to raising new trade barriers, make domestic manufacturing more attractive as the steep increases in Customs duties may make imports unaffordable. For agri products such as pulses, which have witnessed an increase from 30 per cent to 70 per cent, this would provide encouragement in increasing the cultivable area, on the back of good pulses production in recent years,” M S Mani, indirect tax partner, Deloitte India, said. Both sides have also decided on two separate tracks of further discussions - aimed at finding mutually acceptable solutions to trade concerns in the short term and identifying sectors for long-term growth. “To this end, a delegation from the commerce department is now set to visit Washington DC by mid-July to identify the final list of products on which some announcement can be made by the political leaderships on both sides,” the official said. India has pointed out the prospect of growth of exports in food and agriculture, engineering goods, and auto components. On the other hand, even as the Donald Trump-led administration has trained its guns on India for a huge trade imbalance, the talks saw India pointing out that it may source more crude oil from the US in the future, initial shipments of which started earlier last month. It also flagged the long list of purchase orders filed by Indian airline companies for US-based aircraft manufacturers and the large amount of services exports that occur from the US in the form of educational services. Officials from the ministries of agriculture, mines, and steel also took part in the latest talks with the US. However, no official from the oil ministry took part in the meeting which did not see the US side raise the issue of Indian oil imports from Iran, sources said.