India has issued a statement of intent to raise duties on a list of items that are currently being imported from the U.S. from August 2018.
This is largely seen as retaliatory action against U.S. increasing import tariffs against certain products that will likely affect Indian exports.
How has the tariff war unfolded thus far?
This was in retaliation to the US announcement for imposing tariffs on steel and aluminium items (25% and 10% respectively) from most countries.
Significantly, US imports steel items worth approximately $795 million and aluminium products worth $424 million from India.
In retaliation, India has recently announced a hike in duty for 29 items that are currently imported from the US from August 2018.
India’s declaration to the World Trade Organization (WTO) has made it clearly its actions are merely to balance the losses arising from the U.S. tariffs.
To this end, India reserves the right to adjust the specific products for which import concessions are to be suspended, and the rate of duty to be imposed.
The items currently listed by India, which totalled to 29, included lentils, boric acid, fresh apples and shelled almonds.
What are the products that will take the biggest hit?
Almonds - Of the listed products, the category that is expected to bring in the highest additional duties is almonds (both dried and in shell).
Currently, the tariff on almond is Rs. 35 per kg and it accounted for $580.63 million in bilateral trade for the year 2017.
As the duty is raised to the proposed Rs. 42 per Kg, an additional earnings of $116.13 million from almonds is likely.
Apples - This is the 2nd largest category that is likely to be impacted and India imported fresh apples worth $96.57 million from the US in 2017.
The import duty has been increased from 50% to 75% and the likely additional revenue is estimated at $24.14 million.
Diagnostic Reagents - This is another category that is likely to take a massive impact as duty has been doubled from the current 10% to 20% overall.
How does the future look?
As the government has proposed August as the kick in time for the new tariffs, it is a likely that the government intents to negotiate with U.S. authorities.
Commerce and Industries minister Suresh Prabu is already said to be engaged in discussions for arriving at a mutually agreeable solution.
