US tariffs on China could make some Indian products more competitive: GTRI

Imposition of steep 125 per cent tariffs on China by the US could help Indian products from sectors such as textiles, leather, engineering, and electronics become more competitive in America, think tank GTRI said on Friday.

However, the benefits may be short-lived unless India proactively leverages this breathing space to strengthen its export ecosystem, streamline compliance processes, and enhance engagement with US buyers, the Global Trade Research Initiative (GTRI) said. 

It suggested that the government reintroduce interest equalisation scheme to help small firms with access to cheaper working capital credit and customs expediting shipments.

The 90-day suspension of country-specific tariffs, as outlined in the new executive order, offers a small window of opportunity for Indian exporters, GTRI Founder Ajay Srivastava said.

While Chinese goods now face steep tariffs of up to 125 per cent, imports from India will be subject to a flat 10 per cent additional duty, significantly lower than the earlier punitive rates proposed under the April 2 order.

"This temporary relief could help Indian products become more competitive in the US market, especially in sectors where India competes directly with China, such as textiles, leather goods, engineering items, and electronics," he said. In these segments, India competes directly with China.

He asked the Indian exporters to carefully review the latest US executive order and customs guidelines to understand which products will face new tariffs and which may be exempt and the timelines.

According to the modifications in the order, if a product contains at least 20 per cent US made components, only the non-US portion will be taxed, provided the value breakdown is clearly declared, he said.

"Items already en route to the US before April 5 and entering by May 27 will not face the new duties. Goods shipped between April 5 and April 9 will be charged a flat 10 per cent, avoiding steeper country-specific tariffs," the think tank clarified.