The US has reduced tariffs on India, giving India a competitive edge over most ASEAN countries and positioning it favorably against China. President Donald Trump’s trade deal with India will lower reciprocal tariffs to 18% from the previous 25%. While details on handling the additional 25% punitive tariff due to Russian oil purchases remain unclear, US Ambassador to India Sergia Gor mentioned that the final tariff rate will be 18%.
This development is seen as a positive boost for India’s economy, exports, sentiments, and financial markets, with further specifics awaited. Notably, tariffs under Section 232 of the Trade Expansion Act are likely to remain unaffected by this relief, impacting sectors such as auto, steel, aluminum, lumber, and copper. Fuel imports from Russia have decreased, with private sector refiners cutting purchases post-US sanctions on Russian entities.
The report indicates a shift in the US as a fuel supplier, moving from the sixth to the fifth position in the current fiscal year. Sectors like textiles, gems, engineering goods, leather, and chemicals are expected to benefit in the short term. The forthcoming bilateral trade agreement is anticipated to reveal more insights on product lines, trade, and investment commitments.
