$23 Bn US Imports Open for Tariff Cut; Textiles, G&J, Footwear Accept Cut

Chennai: India is open to reduction of tariffs on more than half of US imports worth $23 billion in the first phase of a trade deal. Industries, including textiles, gems and jewellery and footwear have informed the government that the reduction in duties on US imports is acceptable for them.

The US trade team, which has arrived in India, will be initially discussing the broad contours of the Bilateral Trade Agreement. It is expected to first take up goods trade, followed by services and then investments in phases.

According to Reuters, India is open to reducing tariffs on 55 per cent of US imports that are now subject to tariffs ranging from 5 per cent to 30 per cent. These imports are currently valued at $23 billion.

“Most of the industries are proactive about the tariff reduction which is a part of the Bilateral Trade Agreement with the US. Textiles, gems and jewellery and footwear have already informed the government that tariff reduction is acceptable for them. Automotive industry has sought some more time to discuss with the players,” said Ajay Sahai, director general, FIEO.

For textiles, gems and jewellery and footwear, US imports are not significant compared to the exports. Hence, the duty reduction on imported products will not affect the domestic industry. However, the import of high-end cars and motorcycles is a matter of concern for both Indian and foreign manufacturers who have established their production ecosystem in the country.

According to GJEPC, it has recommended reduction of duties on worked and unworked pearls from 5-10 per cent to zero per cent, precious and semi-precious stone from 5 per cent to 2.5 per cent, worked lab-grown diamonds 5 per cent to 2.5 per cent, 1 per cent reduction in gold and silver bars and polished diamonds 5 per cent to 2.5 per cent.

Leather and footwear producers find that tariff reduction will not affect them as the US exports are miniscule.

In textiles, India largely imports extra long staple cotton from the US as India does not have adequate production. The import duties on ELS cotton have already been lowered.

India has already lowered duties on motorcycles, Bourbon whiskey and a few wines.

Meanwhile, the 6 per cent equalization levy on the online advertisements of big tech companies like Google, Meta and X is being abolished from April 1, 2025. The amendment made in the Finance Bill is perceived as India coming under the pressure of the US government and the Department of Government Efficiency (DOGE) headed by X owner Elon Musk. India had earlier withdrawn the 2 per cent equalization levy on e-commerce firms.