India’s trade minister said the government is taking steps to diversify exports in his first comments since Donald Trump imposed an eye-watering 50 per cent tariff on New Delhi earlier this week.
The US president slapped India with one of the steepest tariff rates after declaring a 25 per cent penalty for the South Asian country’s purchase of Russian oil to go with a previously imposed 25 per cent import levy. The punitive tariff took effect on 27 August.
The levy applies to a wide range of goods such as garments, gems and jewellery, footwear, furniture, and chemicals, leaving India – one of the world’s fastest growing economies – to face a slump in trade with its largest export market. It threatens thousands of small exporters from Tamil Nadu in the south India to prime minister Narendra Modi’s home state of Gujarat in the west.
Indian commerce minister Piyush Goyal on Friday said New Delhi is looking towards the Middle East to diversify trade to support exporters hit by “unilateral action” taken by a country.
“If any country wants to enter into a free trade agreement with us, we are always ready. But I believe that any form of discrimination affects the self-confidence and self-respect of India’s 1.4 billion citizens,” Mr Goyal was quoted by ANI news agency as saying. He added that India would neither “bow down nor ever appear weak” and continue moving forward to capture new markets.
The minister said a Free Trade Agreement (FTA) with Oman will be finalised soon, while Qatar and Saudi Arabia are willing to negotiate a pact with New Delhi. He reportedly added that FTA talks with the EU were moving fast.
“Our exports this year will be higher than last year,” Mr Goyal said, adding: “Our share in the global market is still very low, so what is there to fear.”
The Indian government is in consultation with all the stakeholders, including Indian missions abroad, for diversification of exports, the minister said.
He said the iron ore and steel industry was looking to export 60 million tonnes of steel from the country. “This is another sector where we can become a supplier to many countries,” Mr Goyal added.
Sajjid Chinoy, JP Morgan’s managing director, told CNBC-TV18 that at 50 per cent levies, Indian exports will lose their competitiveness. Around 1 per cent of India’s GDP was directly at risk from Trump’s tariff, while the indirect impact could be even larger, he said.
The research group Global Trade Research Initiative estimates that nearly two-thirds of Indian exports to the US – valued at about $60bn – now attract the highest tariff rate of 50 per cent, according to NDTV. Overall, merchandise exports to the US could fall more than 40 per cent this year, to about $50bn from $87bn in 2024.
India previously criticised Mr Trump’s additional tariff, calling it “unfair and unfortunate”. The foreign ministry said earlier this month that New Delhi would “take all necessary steps to protect its national interests”.
Mr Goyal on Friday urged industry players to make the initiative fully independent and self-sufficient, while assuring government support to manage trade-related stress. “Let this be a completely self sufficient industry led initiative. And at every point of time the important criteria should be an assessment of its outcome and whether the participants go back happy and satisfied at their investment into this conference come exhibition,” he added.
The commerce ministry is expediting the rollout of an Export Promotion Mission to support exporters and build resilient supply chains, Times of India reported.
