Tariff wise: Inter-Ministerial Group to keep an eye on import growth, efforts to increase exports in 20 countries

New Delhi| The Indian government, which is examining the possible impact of US tariffs in every respect, has formed an inter-ministerial group with the aim of controlling the possible import growth from China, Vietnam and Thailand. At the same time, under the dual strategy, the Commerce Ministry has also intensified efforts to find new opportunities for domestic exporters. In this sequence, talks are being held with 20 countries.

According to sources, there is a fear that due to decline in exports to America due to high tariffs, countries like China, Vietnam and Thailand will try to spend their goods in India. This may increase imports of consumer goods, electronics, chemicals and steel etc. To monitor this, an Import Monitoring Group has been formed which will include officials from Commerce, Revenue Department 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 mutual tariffs of America. But Indian exports to the US are expected to decline in some sectors due to 26% retaliatory tariffs. Considering the concerns of exporters, the government is also committed to helping them find a new market. Sources said that the Commerce Ministry is trying to find a solution through the proposed free trade agreements with the European Union, Oman, New Zealand and the UK.

Exporters’ expectations pinned on 20 countries
The 20 countries specifically identified by the Indian government to explore new markets for exports 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 authorities to organize a series of bilateral meetings with these countries.

The clear effect of increase in imports will be visible in June-July
The U.S. has imposed tariffs of 46 percent on Vietnam, 34 percent on China, 32 percent on Indonesia, and 36 percent on Thailand. Due to this, the clear effect of increasing their imports in India is likely 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.

Export promotion mission expedited for cheap loans
The Ministry of Commerce is also rapidly pursuing the formulation of its Export Promotion Mission to support exporters by providing loans at affordable rates. The Government had announced in the general budget the establishment of an Export Promotion Mission with an outlay of Rs 2,250 crore with the objective of increasing the country’s exports.

3 Ministries working together on the plans
Efforts to resolve the tariff war through a bilateral trade agreement with the US have already been intensified. Both countries are trying to finalize the first phase of the agreement by September-October this year. In fact, in case of this agreement, the Trump administration may consider reducing the tariffs against that country. The U.S. accounts for about 18 percent of India’s total merchandise exports and 6.22 percent of imports and 10.73 percent of bilateral trade.

Efforts are also being made to find a solution with America
The government is formulating schemes to promote alternative financing instruments by strengthening factoring services and providing assistance to deal with non-tariff measures imposed by other countries besides providing loans to MSME exporters on easy terms. Commerce, MSME and Finance Ministries are working together on these schemes prepared under the Export Promotion Mission.