India to follow wait-and-watch approach on US tariffs; not to act in hurry: Report

New Delhi: India will wait and watch the situation emanating from the imposition of additional import duties by the US on the global trade and not take any action in a hurry as America may itself face problems from its domestic industry, government sources said.

US President Donald Trump on April 2 announced reciprocal tariffs ranging 11-49 per cent on about 60 countries, including India and China. It will come into effect from April 9.

The official said there are both challenges and opportunities for India as many of its competitor countries in exports, such as China Vietnam, Bangladesh, Cambodia and Thailand, face higher duties.

"As a country we need to watch the situation and need not be in a hurry. This is something new that has happened. It is unprecedented. The US industry too would be angry from this move and challenges will also be there. We need to wait, observe, and and see because we should not rush to conclusion that this is it for the future. We need to see what is there in store on their side," one of the sources said.

The duties announced by the US are aimed at cutting down its trade deficit and boost manufacturing.

On the 27 per cent duty on India, they added that only 6-7 sectors like shrimp and carpet could face challenges from the steep taxes, but majority of other sectors like pharma and electronics would get opportunities to increase shipments as competitor nations would face higher duties than India.

As per rough calculations, about 25 per cent of India's exports have got exemptions from taxes and the rest have "mixed scenarios".

They also said price-sensitive commodities such as gold jewellery and carpets would face the heat of duties.

From 2021-22 to 2023-24, the US was India's largest trading partner. The US accounts for about 18 per cent of India's total goods exports, 6.22 per cent in imports, and 10.73 per cent in bilateral trade.

With America, India had a trade surplus (the difference between imports and exports) of $35.32 billion in goods in 2023-24. This was $27.7 billion in 2022-23, $32.85 billion in 2021-22, $22.73 billion in 2020-21, and $17.26 billion in 2019-20.

In 2024, India's main exports to the US included drug formulations and biologicals ($8.1 billion), telecom instruments ($6.5 billion), precious and semi-precious stones ($5.3 billion), petroleum products ($4.1 billion), gold and other precious metal jewellery ($3.2 billion), ready-made garments of cotton, including accessories ($2.8 billion), and products of iron and steel ($2.7 billion).

Imports included crude oil ($4.5 billion), petroleum products ($3.6 billion), coal, coke ($3.4 billion), cut and polished diamonds ($2.6 billion), electric machinery ($1.4 billion), aircraft, spacecraft and parts ($1.3 billion), and gold ($1.3 billion).

According to trade experts, as China would face 54 per cent tariffs, there are possibilities of dumping of goods in India.

The commerce ministry is carefully examining implications of the announcements made by the US.

They are holding stakeholder consultations to seek their feedback and are engaged with the line ministries on the development to assess the impact.

Asked about the impact of these duties on India's agriculture exports to the US, one of the sources said the Indian diaspora in the US would consume the commodities irrespective of prices.

In case of rice exports, while current US tariffs are 9 per cent, India maintains an edge against Vietnam and Thailand despite the 27 per cent increase.

In 2024, India's fish, meat, and processed seafood exports stood at $2.58 billion. Shipments of processed food, sugar, and cocoa was $1.03 billion.

Similarly, the country's cereals, vegetables, fruits, and spices exports were valued at $1.91 billion last year.

Dairy products worth $181.49 million were shipped in 2024 to America, while edible oils shipment was $199.75 million.

Alcohol, wines, and spirits exports aggregated at $19.20 million.