Too early to assess impact of US tariff change on economy: FM Sitharaman

Sitharaman tells banks to focus on core business.

The Commerce Ministry is reviewing the evolving trade situation following the US Supreme Court ruling on tariffs and it is too early to assess its impact on the Indian economy, Union Finance Minister Nirmala Sitharaman said on Monday.

Addressing a press conference, the FM said the clarity on the impact of the changes in US tariff rates would emerge only after detailed review and consultations in the coming days. “On the trade, particularly aside from the Indian economy in general, the Commerce Ministry is reviewing the situation and the delegation will have to take a call on when they’re going to go for further negotiations. It’s a bit too early for me to comment,” she added.

Sitharaman’s remarks came days after the US Supreme Court termed President Donald Trump’s decision of imposition of sweeping taxes on imports illegal. The tariffs imposed on India were among the highest at 50 per cent. It included a 25 per cent punitive tariff for India’s economic engagement with Russia.

In a trade deal announced earlier this month, the US agreed to lower the tariff to 18 per cent. In return, the Trump administration has claimed that India has agreed to eliminate tariffs on a majority of American products and stop purchase of Russian oil.

Following the adverse Supreme Court ruling, Trump announced that the US will raise a ⁠temporary tariff from 10 per cent to 15 per cent on US imports from all countries, the maximum level allowed under the law.

The US Supreme Court’s ruling has affected the progress on the India-US trade deal. The official-level talks to finalise the legal text of the deal has been delayed. Joint Secretary in the Department of Commerce Darpan Jain, who is the chief negotiator from the Indian side, was scheduled to visit Washington this week. The visit has been postponed.

Addressing a press conference after the customary post-budget address to the Central Board of the Reserve Bank of India (RBI), Sitharaman said India has been on a very clear path of wanting to have trade deals and has already inked pacts with Australia, New Zealand, the UAE, Qatar, Oman, the EU and the UK. “So, therefore, our attempt to have a trade agreement will go on with countries,” she said. Meanwhile, Sitharaman also flagged concern over mis-selling of products by banks.

“Banks should concentrate on their core business. My pet peeve has always been you’re spending more time on selling insurance when it is not required,” she said.

Earlier this month, the RBI issued draft guidelines on mis-selling, saying banks will have to refund the entire amount paid by the customer for purchase of the product or service and also compensate the customer for any loss arising due to mis-selling as per an approved policy.

The RBI has invited public feedback on the guidelines until March 4 and the stricter norms to curb mis-selling are scheduled to come into effect from July 1. 

Quote - On the trade particularly aside from the Indian economy in general the Commerce Ministry is reviewing the situation and the delegation will have to take a call on when they're going to go for further negotiations - Nirmala Sitharaman Union Finance Minister