NEW DELHI, Aug 27: The finance ministry has warned that the immediate impact of US tariffs on Indian exports may be limited, but their secondary and tertiary effects on the economy pose challenges that must be addressed.
The monthly economic review released by the ministry said that ongoing India-US trade negotiations are critical in addressing these issues.
The steep 50% tariff on Indian goods entering the US, which came into effect from August 27, would impact exports worth more than USD 48 billion.
The sectors bearing the brunt of the high import duties imposed by the Trump administration include textiles/clothing, gems and jewellery, shrimp, leather and footwear, animal products, chemicals, and electrical and mechanical machinery.
India is actively pursuing a diversified trade strategy to sustain its resilient trade performance, including the recently concluded FTA with the UK and EFTA and ongoing FTA negotiations with the US, EU, New Zealand, Chile, and Peru
However, these initiatives will take time to show results and may not fully address the shortfall in exports to the US that may arise if the current tariff rates on India persist.
India’s strong economic performance over the past few years, along with policy stability and high infrastructure investment, has earned it a sovereign rating upgrade by S&P from ‘BBB-‘ to ‘BBB’.
The report also suggests that the government’s focus on employment generation through schemes like the PM Viksit Bharat Rozgar Yojana, combined with reforms in the education sector and skill development initiatives, aims to create a workforce well-prepared for the demands of the changing world. (PTI)
