INDIA RETALIATES, FINALLY!

On Saturday, the Govt finally gathered the gumption, went ahead and hiked customs duty on 28 items which were being imported from USA.

We are almost a year late in retaliating but better late than never. It might not be a good move in terms of giving more wind to the raging tariff war but from a political standpoint, this move was necessary to show India’s authority too.

We had to hit back. In March 2018, from zero duty, USA imposed 25% tariff on steel and a 10% import duty on aluminium products. Then there was the withdrawal of export incentives to Indian exporters under its Generalised System of Preferences (GSP) programme. These benefits were rolled back from June 5.

For the past one year, India extended the deadline for imposition of these duties eight times, hoping that it would be able to negotiate bilaterally. Nothing happened. Finally, the duties were hiked.

The new tariffs came into effect from yesterday and here is a quick look at the things, imported from USA, which will cost us more. Earlier, the list included 29 goods but India has removed artemia, a kind of shrimp, from the list.

The items include – apples, walnut, chickpeas, Bengal gram dal, masur dal, lentils, boric acid and binders for foundry moulds, domestic reagents, certain kind of nuts, iron and steel products, pears, flat rolled products of stainless steel, other alloy steel, tube and pipe fittings, and screws, bolts and rivets.

When we see these items, we cannot but scratch our heads in wonder – why are we importing chickpeas, masur dal, lentils from USA???? It’s a shame in the first place that instead of promoting the growth of these products in the country, we let ourselves depend on imports of the same with huge carbon footprint.  And why was Artemis excluded? Lobbyists at play?  

Many say that this is merely symbolic while many say that India will now see more pressure coming from the USA to sign a bilateral trade pact and seek other concessions, mainly on ecommerce. Let us see how this cookie crumbles.

Unlike what many predict, let’s be realistic. We are not China, thus us hiking duties on 28 products will not exactly trigger off a trade war. The short term will remain uncertain and we could see this getting reflected on the markets. But the markets are not the kind to fixate on one thing – it will look for other triggers and soon, we will enter the “Budget rally.” The 17th Lok Sabha session beings today and the Budget is scheduled for 5th July.