US May Remove 25% Penal Tariff On India After November 30: Top Official
Chief Economic Adviser (CEA) V Anantha Nageswaran on Thursday expressed optimism that the penal tariff imposed on certain imports will likely be withdrawn after November 30, signalling a potential easing of trade restrictions.
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Chief Economic Adviser V Anantha Nageswaran.
On Thursday, Chief Economic Adviser (CEA) V Anantha Nageswaran expressed confidence that the additional 25% penal tariff imposed on certain Indian imports will likely be withdrawn after November 30, indicating a potential relaxation of trade barriers amid ongoing economic negotiations between India and the US.
During an event hosted by the Merchants' Chamber of Commerce & Industry in Kolkata, the CEA stated, "All of us are already working on this issue, and I would like to address the tariff situation. The original reciprocal tariff of 25 percent combined with the additional penal tariff of 25 percent were both unexpected. I believe geopolitical factors may have influenced the implementation of the second 25 percent tariff, but considering recent developments over the past few weeks, my intuition suggests that the penal tariff will no longer be in effect after November 30."
"I anticipate a resolution regarding the penal tariff in the next couple of months, and hopefully on the reciprocal tariffs as well," he added, referring to the continuous dialogue between Indian and US officials.
Nageswaran noted that India's annual export volume, currently at USD 850 billion, is progressing toward the USD 1 trillion target, which would represent 25 percent of GDP, demonstrating a robust and open economy.
Former US President Trump had utilized the International Emergency Economic Powers Act (IEEPA), a 1977 legislation designed for imposing sanctions during foreign emergencies, to implement reciprocal tariffs on numerous countries. India initially faced 25 percent tariffs, which were subsequently increased to 50 percent.
The elevated duties apply to all Indian products either entering US consumption channels or being withdrawn from warehouses for consumption. As a result, the 50 percent tariffs on Indian exports to the US are now operational.
According to the US Customs notification, while most Indian products will be subject to these higher duties along with any other applicable charges such as antidumping or countervailing duties, certain items are exempted.
The notification specifies exemptions for products listed separately in the US tariff schedule. Iron and steel products, including certain derivatives, are exempt from the additional duty. This exemption also extends to aluminum products and their derivatives.
Passenger vehicles including sedans, SUVs, crossovers, minivans, cargo vans, and light trucks, as well as their spare parts, have been excluded from the higher tariffs. Additionally, semi-finished copper products and specific intensive copper derivatives do not fall under the increased tariff regime.
In summary, while the 50 percent tariff broadly affects Indian exports to the US, significant categories including iron, steel, aluminum, vehicles, automotive parts, and copper products remain outside its scope.
A report by the Global Trade Research Initiative (GTRI) indicates that approximately 30.2 percent of India's exports to the United States, valued at USD 27.6 billion, will continue to enter the US market duty-free despite the implementation of these higher tariffs.