Tariffs, trade and the green pivot: How Indian exporters can navigate a shifting global order
Remove Ads
Tired of too many ads?
Remove Ads
Tired of too many ads?
Remove Ads
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com .)
The global trade environment is in flux, ever since the new tariffs have been announced, while also changing the market priorities. The United States has imposed a 26% reciprocal tariff on Indian goods, and that affects key sectors including steel, aluminum, pharmaceuticals, textiles, and electronics.This policy is part of President Trump's trade strategy, which has been brought in to protect U.S. industries. But as it turns out, it might create challenges for Indian exporters by increasing costs and reducing the competitiveness in the U.S. market. For global manufacturers, this means re-routing trade flows to avoid higher costs.In practice, companies are considering alternate suppliers and markets. For example, major electronics firms are moving production from China to Vietnam and India to dodge Chinese tariffs. In metals, exports are being redirected to friendlier markets. The sudden policy shift has effectively reshuffled supply chains, prompting Indian manufacturers to rethink export strategies. Exporters are scrutinizing their footprints and looking beyond the U.S. – and beyond China – for growth.India has so far largely avoided direct U.S. targeting, but it will feel the repercussions. In the short term, Indian firms face added volatility: commodity input costs can spike under global tariffs, and demand in tariff-affected markets may soften. With U.S. markets effectively walled off for some exports, India risks surplus domestic output and dumping pressures. India's Steel Association warns that a sudden collapse in U.S. orders (85% down) could flood India's market with excess capacity. The U.S. tariff surge could even depress world prices, squeezing Indian margins.Longer term, experts emphasize the need for 'future-ready' export strategies. India's competitive position is improving – Indian products currently face lower U.S. tariffs than Chinese goods – which could make Indian exports more attractive if Chinese shipments shrink. However, it is important to understand that gains are not automatic. The IMF stresses that tariff wars curb growth and investment, which may translate into slower global demand (especially from developed markets). The Indian industry is already diversifying. In sum, while India avoids the immediate brunt of recent U.S. tariff moves, second-order effects – supply-chain flux, higher input costs, shifting orders – highlight the urgency of broadening trade links and building resilience.While the US is taking a protectionist stance, the European Union is aggressively aligning trade policy with climate goals. The EU's Carbon Border Adjustment Mechanism (CBAM) imposes a carbon levy on imports of energy-intensive goods. CBAM, which expects foreign producers to match EU carbon prices on embedded emissions, creates a level playing field for EU industry but raises costs for higher-emitting imports.At the same time, new EU regulations tighten social and environmental rules in value chains. The Corporate Sustainability Due Diligence Directive (CSDDD) requires large companies to identify and mitigate human-rights and environmental harms across their global supply chains. Importers and traders of major commodities (rubber, soy, wood, cocoa…etc.) across the EU are asked to ensure their supplies are deforestation-free under EU Deforestation Directive (EUDR). Non-EU firms that supply EU companies will thus face direct scrutiny: sourcing from an Indian supplier now implies liability for that supplier's practices under EU law. Similarly, the Corporate Sustainability Reporting Directive (CSRD) (with European Sustainability Reporting Standards, ESRS) mandates that EU-listed companies disclose detailed sustainability metrics. These transparency rules will trickle down, as manufacturers must now provide data to their EU customers.Sectors most affected are those with heavy carbon footprints or extended value chains. EU buyers will demand precise 'embodied emissions' data for every tonne imported under CBAM. In short, the EU has essentially made sustainability compliance a prerequisite for market access. Exporters to Europe must navigate a web of new rules – carbon pricing, supply-chain due diligence and rigorous sustainability reporting – in order to compete.For Indian exporters who embrace transparency, this new reality can be an opportunity rather than an obstacle. The EU's carbon taxes and procurement policies mean that low-carbon, traceable supply chains now enjoy a competitive edge. Case in point is CBAM which explicitly aims to 'incentivize foreign producers to adopt greener practices'. Indeed, producers who can furnish accurate emissions data will avoid hefty CBAM charges and may even be eligible for rebates if they've already priced carbon costs. With India's Carbon Credits Trading Scheme (CCTS) gaining momentum, manufacturers can align with global sustainability standards and enhance their access to international markets.Beyond raw materials, exporters with certified sustainable practices earn market trust. Consumer and corporate buyers increasingly reward 'green' suppliers. A recent survey indicates that globally, compliance to external supply chain regulations is cited (by 59% of surveyed companies) as one of the key drivers of sustainable procurement practices. Many EU companies require their suppliers to meet net-zero targets. Thus, Indian firms that invest in traceability (logging of Scope 1,2,3 emissions) and transparent reporting can position themselves as preferred partners. Sustainability is no longer just a 'nice-to-have'; it's quickly becoming a gatekeeper for market access. Early movers – those who adopt renewable energy, optimize material use, and embed sustainability into their processes – can brand themselves as premium, compliant exporters and capture new demand in eco-conscious markets worldwide.The challenge is that most Indian SMEs are still far behind. Large Indian corporations (mandated to disclose) have made progress – recent data show about 94% of top listed companies now report Scope 1 and 2 emissions and energy usage. But at the micro, small and medium levels, sustainability tracking is scant. A global survey of small businesses found only ~4% could even provide data on their total emissions, and only 5% measured their renewable energy use. Most lack formal GHG accounting, have limited digital infrastructure, and do not issue sustainability reports.There are signs of change: a recent SIDBI MSME survey reported that 39% of firms increased investment in environmental measures during 2024, and 44% plan further investments next year. But these remain minority actions. Without urgent upgrades, thousands of small exporters risk being disqualified from lucrative contracts. With EU buyers demanding digital data on emissions and supply-chain practices, any gap in reporting or traceability could effectively shut small manufacturers out. Only a tiny fraction of India's MSMEs are equipped to measure or disclose this footprint. If unaddressed, this gap endangers India's competitive access to high-value markets.Here, technology can help close the gap cost-effectively. Smart digital platforms and AI tools are increasingly available to simplify compliance. The UN-backed SME Climate Hub, for example, offers Indian MSMEs free online tools – a Business Carbon Calculator to identify emissions sources and a web-based reporting portal to log annual emissions – making it easier to start the climate disclosure process. In the private sector, a new generation of startups and software solutions are applying AI to sustainability. By detecting inefficiencies in real time, such systems guide business leaders to reduce emissions, waste and power draw without manual data entry.In the face of recent U.S. tariffs, Indian exporters cannot afford complacency. These policies bring near-term headaches, but they also reinforce a vital lesson: diversification is essential. For Indian industry, the EU market – Europe's $18 trillion economy – now presents a clear opportunity for growth. Success in Europe will require a dual focus on digitalization and decarbonization. Exporters who can digitize their operations, embed carbon tracking into routine practice, and transparently disclose their environmental footprint will not only meet new EU trade rules but also unlock new value.The disruptions from trade barriers should galvanize Indian firms to accelerate their sustainability journey. Those who act decisively today stand to transform uncertainty into a long-term advantage, cementing India's place as a reliable, green supplier on the global stage.The writer is CEO and Co-founder, Sprih
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Deccan Herald
20 minutes ago
- Deccan Herald
When tactical successes don't translate to peace
On June 13, Israel launched Operation Rising Lion with a spectacular attack targeting Iran's top military commanders and nuclear scientists. In the currently popular Indian parlance, it would be called ghar mein ghus ke maarna (roughly translated as 'hitting the enemy in his den') – a policy that has all along evoked admiration among a section of opinion in India and an urge to emulate in May, India had put up its best yet publicised performance of the above policy by launching Operation Sindoor targeting top symbols of Pakistan's brazen terror. Both attacks were followed by an aerial war. However, barring a key aspect examined at the end of this essay, the similarity between the two situations ends Israel has lived in a perennial state of conflict and spends around 9% of its GDP on defence. In contrast, India spends barely 2%, admittedly with a larger GDP, but also much larger security challenges. Second, there is no parallel between the two situations from the moral and international law angle. India's legitimate fight has been against Pakistan's attempts from its inception to change the territorial status quo and destabilise India through overt and covert warfare. On the other hand, Israel's policy, especially in respect of the Palestinians, has violated all norms of international Israel is up against militarily far weaker adversaries and at best a nuclear threshold state in Iran, but one that is no match for the technological superiority of the US-supplied Israeli war machine. India, on the other hand, faces two nuclear-armed neighbours. Pakistan's war machine is not much inferior to India's and its backer – China – possesses formidable military power. This imposes limitations on India's ability to the Israeli attacks, combined with the US bombardment of key nuclear facilities, caused considerable damage in Iran after its air defences were largely neutralised. The damage caused by India to Pakistan's military installations was no match. According to the information from official sources, India was able to neutralise Pakistan's air defences sufficiently to be able to successfully attack airbases in the early hours of May 10. Our official discourse also maintains that Pakistan was chastened enough by this stage to ask for a ceasefire. Why India did not press home this advantage remains unclear. In raising this aspect, I have in mind further degradation of Pakistan's war machine and not unrealistic expectations generated by our political and strategic discourse, such as taking back PoK or Haji Pir etc. that were voiced in the wake of the in the UN debates and voting on resolutions, Israel appears isolated. But it is militarily the most powerful country in its region and no longer faces any meaningful opposition from the Arab world. It enjoys solid US backing. Other Western countries may disagree with it on Palestine, but share its goal of preventing Iran from going contrast, we are now pretty much on our own in dealing with the security challenge from Pakistan. While there was widespread condemnation of the Pahalgam terror attack, no country named Pakistan as the perpetrator, and there were multiple calls for restraint from the international community wary of a wider war between two nuclear-armed countries. China's support for Pakistan was palpable during the conflict, and India's bugbear Field Marshal Asim Munir was the toast of the White House not too long China's iron brother Pakistan continues to be valuable to Washington too, albeit transactionally, because of its geographic location. Further, if we are aiming at reviving the level of international focus on terrorism that prevailed for a decade plus after 9/11, we may be in for disappointment. The global agenda has moved on. While robust deterrence and coercion are indispensable in dealing with Pakistan, the foregoing provides a reality check for those with the desire to emulate Israel..A measured over the years, Israel has notched up several brilliant tactical successes against its adversaries, but has no peace. The Palestinian problem continues to fester, and estimates of a setback to Iran's nuclear programme range from a few months to a few years. Most credible observers believe that only diplomacy can achieve its enduring capping. Israel has shunned diplomacy in dealing with its adversaries for several years now and has followed a policy, euphemistically described as mowing the grass, to degrade their military capabilities our case, notwithstanding the brilliant tactical success of Operation Sindoor, we are nowhere close to putting an end to Pakistan's terror, much less resolving our larger Pakistan problem. Pakistan's terror infrastructure is largely intact. Asim Munir's position has strengthened, at least for now. Following the Mumbai terror attack, we progressively abandoned bilateral diplomacy with Pakistan, castigating it for having failed to change the conduct of the Pakistani state. Pakistan's hardline posture under Asim Munir, combined with the justified anger of the Indian public at Pakistan's conduct and Pakistan's salience in our electoral politics, makes its resumption extremely security-centric approach over the last few years has also failed to achieve the above goal. But for want of any other instrumentality, we cannot afford to dilute it. Therefore, we too may be faced with the need to mow the grass periodically, albeit in a field strewn with nuclear weapons. This is integral to the new normal announced by Prime Minister Modi on May 12..(The writer is a former High Commissioner to Pakistan and author of India's Pakistan Conundrum: Managing a Complex Relationship)
Mint
31 minutes ago
- Mint
Trump Tariffs Live: US President targets 5 more countries with 25–40% tariff warnings after Japan, South Korea
US President Donald Trump on Monday (July 7) sent formal letters to a number of countries, including Japan and South Korea, announcing new tariffs ranging from 25% to 40% on imports, effective August 1. The move marks a renewed push to force new trade deals before an earlier-imposed July 9 deadline. The letters cited 'significant trade deficits' and warned of penalties for any retaliatory tariff hikes, stating such moves would be matched 'on top of the 25%' rate. However, the letters also left room for negotiation, with Trump saying the US would 'perhaps consider an adjustment' if trade barriers are removed. Starting August 1, 2025, the US will impose a 30% tariff on all products imported from Bosnia and Herzegovina. The US cites a significant trade deficit and a "far from reciprocal" trade relationship as justification for the move. The letter urges Bosnia and Herzegovina to pursue more balanced and fair trade with the US. Companies from Bosnia that choose to manufacture goods within the U.S. will be exempt from the tariff and receive fast-tracked approvals. If Bosnia increases its tariffs in response, the same percentage increase will be added to the 30% US tariff. Goods rerouted through other countries to evade higher tariffs will still be taxed at the elevated rate. Bosnia is encouraged to participate more directly in the US economy, which Trump describes as the 'Number One Market in the World.' The US will impose a 35% tariff on all Bangladeshi imports, starting August 1, 2025. Trump cited a longstanding and significant trade deficit and non-reciprocal trade practices by Bangladesh, including tariff and non-tariff barriers. The US seeks a more balanced and fair trading relationship, stating current terms are 'far from reciprocal.' Trump invites Bangladeshi firms to manufacture in the US, promising quick, professional approvals for such investments — in 'a matter of weeks.' If Bangladesh retaliates by raising its own tariffs, 'whatever number you choose… will be added onto the 35%'. Goods rerouted through other countries to avoid the tariff will be charged the higher rate. The United States will impose a 35% tariff on all Serbian imports starting August 1, 2025. These tariffs are separate from sector-specific tariffs. Trump cites a 'significant and persistent trade deficit' with Serbia. The trade relationship is described as 'far from reciprocal.' Serbian companies can avoid tariffs by building or manufacturing within the United States. The US promises to process such business approvals quickly and routinely, within a matter of weeks. If Serbia increases its own tariffs in response, the US will add that increase on top of the 35% tariff. Goods transshipped through other countries to avoid the tariff will be subject to the higher tariff. The United States will impose a 36% tariff on all Cambodian exports starting August 1, 2025. Trump cites a persistent trade deficit and non-reciprocal trade relationship caused by Cambodia's tariff and non-tariff barriers. The 36% tariff applies separately from sector-specific tariffs and covers all Cambodian goods entering the US. Products transshipped through third countries to avoid tariffs will still be subject to the higher applicable tariff. Cambodian firms that set up manufacturing in the US will face no tariffs, and the US will fast-track approvals for such ventures. If Cambodia raises its tariffs in response, the US will add that increase to the 36% base rate. A 36% tariff will be imposed on all Thai goods entering the United States starting August 1, 2025. Trump cites a 'significant trade deficit' and 'non-reciprocal' trade policies as the basis for the new tariffs. The tariffs are separate from all sectoral tariffs and apply to all Thai exports. Goods transshipped to avoid duties will be charged the highest applicable tariff. The tariffs are separate from all sectoral tariffs and apply to all Thai exports. Goods transshipped to avoid duties will be charged the highest applicable tariff. Thai companies that build or manufacture products in the US will face no tariffs, with fast-track approvals promised. If Thailand raises its own tariffs in response, the US will add the same increase on top of the 36% base tariff. The United States will impose a 32% tariff on all Indonesian products entering the country. These tariffs will take effect on August 1, 2025. This tariff is independent of any sector-specific duties already in place. Trump cited a 'significant trade deficit' with Indonesia as the reason for the new tariffs. He said the US–Indonesia trade relationship has been 'far from Reciprocal.' Trump announced a 25% tariff on all Tunisian products entering the United States. The tariffs are set to take effect on August 1, 2025. This rate is separate from all sectoral tariffs. Trump blamed Tunisia's "Tariff and Non-Tariff Policies and Trade Barriers" for persistent trade deficits. He described the US–Tunisia trading relationship as "far from reciprocal." The U.S. trade deficit with Tunisia was cited as a threat to U.S. economic and national security. Trump offered Tunisia a chance to avoid tariffs if Tunisian firms build or manufacture products in the US. He said US authorities would fast-track approvals for such operations. If Tunisia imposes retaliatory tariffs, the US would add that amount to the 25% base tariff. Goods transshipped to evade tariffs will be subject to the higher rate. If Tunisia opens its markets and removes trade barriers, the US may 'consider an adjustment' to the tariff rate. US President Donald Trump escalated his global trade offensive on Monday (July 7), issuing fresh tariff warning letters to five additional countries — South Africa, Malaysia, Myanmar, Laos, and Kazakhstan — after already targeting Japan and South Korea. The letters threaten new import duties ranging from 25% to 40% starting August 1, in a sweeping move to rebalance what he calls 'decades of unfair trade'. The letters — nearly identical in tone and content — warned of tariffs ranging from 25% to 40% on all goods exported from these countries to the United States. Trump cited long-standing trade deficits and 'non-reciprocal' relationships as justification. Each letter outlined the specific tariff rate for the respective country: Trump stated that the US had 'agreed to continue working' with each nation despite its 'significant Trade Deficit' with the United States but stressed that 'our relationship has been, unfortunately, far from Reciprocal.' Trump emphasised that the proposed tariffs are separate from all sector-specific tariffs and could increase if the targeted nations retaliated. He warned that 'goods transshipped to evade a higher Tariff will be subject to that higher Tariff.' In each case, he offered a path to avoid the duties: if companies from the targeted countries choose to manufacture goods within the US, 'there will be no Tariff,' and approvals for such moves would be 'quickly, professionally, and routinely' granted. Echoing language used in previous trade spats, Trump justified the new tariffs not just on economic grounds, but as a matter of national security. 'This Deficit is a major threat to our Economy and, indeed, our National Security!' the letters declare. The White House had previously postponed tariffs set to take effect on July 9, opting instead for this formal notification phase ahead of the new August 1 implementation date. In a somewhat conciliatory tone, Trump left open the possibility of modifying the tariff rates: 'If you wish to open your heretofore closed Trading Markets to the United States... we will, perhaps, consider an adjustment to this letter.' He added that tariff levels 'may be modified, upward or downward, depending on our relationship with your Country.'
Deccan Herald
34 minutes ago
- Deccan Herald
China's rare earth materials supply curb, US tariffs to hit auto sales in July: FADA
Several automakers have already reported adverse impact on their production and the situation is likely to aggravate if the Chinese curbs are not eased.
