Tariff War: Inter-ministerial group will keep an eye on import growth, efforts to increase exports to 20 countries

The Government of India, which is studying the potential of US tariffs from all sides, has set up an inter-ministerial committee with the objective of regulating potential increases in imports from China, Vietnam, and Thailand. Simultaneously, as part of a dual approach, the Commerce Ministry too stepped in to bolster the effort to identify new opportunities for exports by Indian sellers. As a part of this sequence of events, negotiations are going on with 20 nations.

According to Amar Ujala sources, there is a fear that due to the decrease in exports to the US due to high tariffs, countries like China, Vietnam, and Thailand will try to sell their goods in India. This may lead to an increase in imports of consumer goods, electronics, chemicals and steel etc. To monitor this, an import monitoring group has been formed which will include officials from the Department of Commerce, Revenue and Department for Promotion of Industry and Internal Trade (DPIIT). However, the government has already clarified that India is in a much better position than other countries due to the US reciprocal tariff. But due to the 26% retaliatory tariff, there is a possibility of a decrease in Indian exports to the US in some sectors. Seeing the concerns of the exporters, the government is also committed to help them find new markets. Sources said that the Commerce Ministry is engaged in finding a solution to this through proposed free trade agreements with the European Union, Oman, New Zealand and the UK.

The 20 countries that the Government of India has specifically identified to find new markets for export include Australia, Brazil, Bangladesh, China, France, Germany, Indonesia, Italy, Japan, Netherlands, Russia, Singapore, South Africa, Saudi Arabia, South Korea, Turkey, UAE, UK, USA and Vietnam. The Commerce Ministry has directed the concerned officials to hold a series of bilateral meetings with these countries.

The US has imposed 46% tariffs on Vietnam, 34% on China, 32% on Indonesia and 36% on Thailand. Due to this, the clear impact of their increased imports in India is expected to be seen in June-July. Sources said that the inter-ministerial group will keep an eye on every data including shipments coming by air and sea routes. The concerned ministries and industry associations have been asked to provide information about the increase in imports and its impact on the domestic industry.

The Commerce Ministry is also rapidly moving forward on the creation of its export promotion mission to support exporters by providing loans at cheaper rates. The government had announced the setting up of an export promotion mission with an outlay of Rs 2,250 crore with the aim of increasing the country's exports in the general budget.

Efforts have already been intensified to resolve the tariff war through a bilateral trade agreement with the US. Both countries are trying to finalize the first phase of the agreement by September-October this year. In fact, in the case of this agreement, the Trump administration can consider reducing the duty against that country. America's share in India's total goods exports is about 18% and 6.22% in imports and 10.73 % in bilateral trade.

Apart from providing loans to MSME exporters on easy terms, the government is preparing plans to promote alternative financing means by strengthening factoring services and providing assistance to deal with non-tariff measures imposed by other countries. The Commerce, MSME, and Finance Ministries are working together on these plans prepared under the Export Promotion Mission.