With lower tariffs, India’s labour-intensive sectors, such as textiles, leather and footwear, handicrafts, chemicals, and gems and jewellery, will be more competitively priced in the US market compared to these nations.
Illustration: Dominic Xavier/Rediff
Key Points
- Goyal also dismissed criticism that New Delhi conceded too much
- India and the US have finalised a framework for the first phase of trade agreement
- Reciprocal tariffs on India are now among the lowest
Commerce and Industry Minister Piyush Goyal on Sunday said Indian goods will have a competitive advantage in US markets compared to products from China and other competitor countries, which face higher levies, following the reduction in reciprocal tariffs to 18 per cent.
India and the US have finalised a framework for the first phase of the bilateral trade agreement, which is expected to be signed by mid-March.
Goyal said reciprocal tariffs (RTs) on India are now among the lowest compared to its competitor nations.
These countries include China (35 per cent), Thailand (19 per cent), Myanmar (40 per cent), Cambodia (19 per cent), Bangladesh (20 per cent), Indonesia (19 per cent), Brazil (50 per cent), and Vietnam (20 per cent).
With lower tariffs, India’s labour-intensive sectors, such as textiles, leather and footwear, handicrafts, chemicals, and gems and jewellery, will be more competitively priced in the US market compared to these nations.
“So, we have to see our competitive advantage over others.
“And comparatively, India’s RTs amongst our peer countries, emerging market economies, and developing countries are amongst the lowest.
“So, therefore, we have an advantage over China’s 35 per cent, and we are 18 per cent,” he told PTI Videos in an interview.
He added that the comparative advantage always gives a country an edge in global markets.
“The important thing is competitive advantage. Even when we reduce our tariffs (for US goods), it’s about competitive advantage,” he said.
Goyal also dismissed criticism that New Delhi conceded too much by accepting the 18 per cent tariff while offering duty concessions to American goods.
He was replying to a question whether India reducing its customs duties, while the US is only cutting its reciprocal tariffs, puts India at a disadvantage.
“I don’t think this is a material issue at all. When some people talk about it or try to highlight this, it only reflects that they don’t understand international trade and they’re only trying to mislead the people,” he said.
He added that businesses, exporters and industry associations understand these issues and have welcomed the agreement.
“…because they realise the massive trade advantage that this is going to give India. And it will ultimately help our farmers.
“We are today one of the largest exporters of farm products…we are exporting 55 billion dollars of farm and fish products every year. 5 lakh crores.
“All of that is income for our farmers…It’ll certainly give them a much bigger value for the farm produce, and farmers’ incomes will increase,” Goyal said.
