Trump tariffs power India's swadeshi drive
Donald Trump
has triggered anxiety as several business sectors and jobs will take a hit. Even though India and the US will continue to negotiate a trade deal, tariffs are likely to stay. Differences between the two countries cannot be resolved overnight to arrive at a trade deal, a senior US official told reporters last week. "Our challenges with India, they've always been a pretty closed market... there are a host of other kinds of geopolitical issues," the US official said. "You've seen the president express concern about, you know, membership in BRICS, purchases of Russian oil and that kind of thing." While saying there were constructive discussions with India, the official added: "These are complex relationships and complex issues, and so I don't think things can be resolved overnight with India."
US Trade Representative Jamieson Greer said on Sunday the tariffs are likely to stay in place rather than be cut as part of continuing negotiations. "A lot of these are set rates pursuant to deals. Some of these deals are announced, some are not, others depend on the level of the trade deficit or surplus we may have with the country," he said. "These tariff rates are pretty much set," Greer told CBS's Face the Nation on Sunday,
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In view of the stalemate in trade talks as India refuses to budge on its core concerns including agriculture and dairy, it seems to be preparing for the long haul.
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Exporters urged to build brands as a way around Trump tariffs
India's swadeshi push
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In the face of Trump's 25% tariffs and warnings of additional penalty for India's trade with Russia, India seems to be hardening its stance. Prime Minister Narendra Modi has taken a defiant stance against Trump's tariff warnings, while encouraging people to buy locally made products. The Modi government has also not stopped purchasing Russia's crude oil.
Modi's government hasn't given India's oil refiners instructions to stop buying Russian oil, and no decision has been taken on whether to halt the purchases, people familiar with the situation told Bloomberg, asking not to be named due to the sensitivity of the matter. Both state-run and private refiners are allowed to buy from preferred sources, and crude purchases remain a commercial decision, several of the people said. Over the weekend, Modi underscored the importance of shielding India's economic interests during uncertain global conditions.
'The world economy is going through many apprehensions — there is an atmosphere of instability,' Modi said at a rally in Uttar Pradesh on Saturday. 'Now, whatever we buy, there should be only one scale: we will buy those things which have been made by the sweat of an Indian.'
PM Modi's current focus on strengthening domestic production and consumption aligns with his established "
Make in India
" programme. This approach has become increasingly significant following the implementation of US tariffs. At Saturday's rally, Modi said: "The interests of our farmers, our small industries and the employment of our youth are of paramount importance."
India's next steps hinge on the severity and duration of any potential penalties. 'Just as Mr. Trump is doing his own cost-benefit analysis for America, each government will do its own analysis,' said Devendra Pant, chief economist of India Ratings, the local arm of Fitch.
India expects US trade negotiators to visit the country toward the end of the month to continue talks on a bilateral deal, an Indian official has told Bloomberg. The nation will hold its ground and won't give the US access to its dairy and agriculture sectors, the official said, citing political and religious sensitivities.
India plans to shield exporters
The government is pushing exporters to build and promote homegrown brands to cope with the 25% tariff imposed by the US, ET has reported.
"It is important for Indian exporters to do brand building and promotion to come out of the clutches of any subsidies amid the US tariffs," an official told ET, adding that the brand promotion exercise can be jointly done by export promotion councils and the India Brand Equity Foundation.
The commerce and industry ministry has also asked sectors such as marine food products to suggest if any scheme based on incremental hiring can be worked out as Ecuador, a major shrimp producer, would face a comparatively lower 15% tariff.
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Govt working on support measures to insulate exporters from Trump tariff: Official
The government is working on certain support measures for exporters in sectors like textiles and chemicals to insulate them from the impact of the Trump tariff, an official told PTI on Monday. The official said that the commerce ministry has held meetings with several export sectors, including steel, food processing, engineering, marine, and agriculture, to understand issues they may face due to high tariffs. Indian exporters from various sectors, including food, marine, and textiles, have sought financial assistance and affordable credit from the government to cope with the 25 per cent Trump tariff.
Exporters are requesting the government to extend fiscal incentives such as interest subsidy and extension of RoDTEP scheme (Remission of Duties and Taxes on Exported Products), RoSCTL (Rebate of State and Central Taxes and Levies), timely payment of dues, and a direct shipping line to the US. The ministry is considering these demands, the official said, adding that the ministry will also engage with states to support the exporters.
Though the government has ruled out subsidies, it has indicated it is open to 'innovative ways' to support exporters, sources told TOI. According to sources, Commerce and Industry Minister Piyush Goyal conveyed this during meetings with industry representatives in Mumbai over the weekend. They said Goyal suggested that banks review their risk assessment and rating models, particularly for small exporters, to help lower borrowing costs. He also agreed to examine proposals to reduce testing and certification charges for MSMEs, sources added.
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