By Neville Lazarus, India reporter
Donald Trump has branded India “tariff king” and a big abuser of trade ties.
He reiterated his commitment of imposing reciprocal tariff rates when Narendra Modi came calling to congratulate him in February.
Karoline Leavitt, the White House press secretary, said: “If you look at the unfair trade practices that we have, you have a 100% tariff from India on American agricultural products.
“This makes it virtually impossible for American products to be imported into these markets, and it puts a lot of Americans out of business and out of work over the past several decades.”
A panicked Indian government rushed a delegation led by its commerce and industry minister – open to cutting tariffs – to try to get a reprieve.
On Tuesday, Trump said: “I heard that India is going to be dropping its tariffs substantially.”
But the president refused to give commitments on any leeway.
America is India’s largest trading partner, with bilateral trade of about $130bn in 2024, but there is an imbalance of about $46bn in favour of India.
The country’s tariffs on US products are among the highest in the world.
India’s exports to the US span 30 sectors and account for 2.3% of its GDP. The reciprocal tariffs could cost the country above $3bn annually.
The disruption would be limited to a few industries – mainly pharmaceuticals, gems and jewellery, automobile parts, and agricultural products.
It’s the farming sector that is bracing for maximum impact – as imports into India from the US face a tariff of almost 37%, while Indian exports to America will pay a 5.3% duty.
The gap between the tariffs in meats and seafood is about 28%, auto components is 23%, textile and clothing is 13%, while it’s 9% in chemicals and pharmaceuticals, and 7.2% in electronics.
The concern for many will be generic medicines, which, according to the US Food & Drug Administration (FDA), comprise 90% of all medical prescriptions in the country.
India is one of the largest exporters to the US and supplies nearly 47% of all generic pharmaceuticals to American patients. Tariffs on these will drive up costs which will most likely be passed on to consumers.
Indian pharma companies will refrain from setting up manufacturing in the US as they will still make a profit with higher tariffs, and it could take six to eight years to construct expensive facilities and get regulatory approvals.
The uncertainty and nervousness hit Indian stock markets and saw a fall in the Sensex in early trading on Wednesday.
Business analysts suggest this may be an opportunity for the Indian government to make structural reforms, reduce protectionist barriers and make domestic companies competitive in the world market.