India in unique position to circumvent US tariffs
Prime Minister Narendra Modi has arrived in Tianjin, China, for the two-day Shanghai Cooperation Organization (SCO) summit, following his visit to Japan. PM Modi is anticipated to negotiate agreements with other SCO members in order to combat the secondary sanctions imposed by US President Donald Trump, particularly on India for purchasing Russian oil, in light of the Trump tariffs that have been enforced globally.
Even though the US Court of Appeals just ruled against the reciprocal tariffs, the ruling will only take effect in mid-October, giving the US government time to reconsider the judgment.
- MAI Scheme: In order to help exporters get prime seats at international fairs, the Market Access Initiative, which assists them in attending events abroad, needs to be revived with greater funding. They would have more access to international markets as a result.
- IES Scheme: With a larger budget and longer-term commitment, the Interest Equalization Scheme, which provided small exporters with lower-cost loans, ought to be revived to aid in their competitiveness.
- EPM Mission: More financing is needed to begin working on the Export Promotion Mission, which is designed to assist exporters with credit and other matters.
- Bharat Trade Net: There is an issue with the Bharat Trade Net, a centralized online system for export documentation. Its launch would facilitate exporting and assist new companies in beginning to export.
- RoDTEP Benefits: In order for exporters to make better plans, the RoDTEP export refund program needs to be guaranteed for longer periods of time.
- Advance Authorization Scheme: To assist clothing exporters, the Advance Authorization Scheme, which permits duty-free imports for exports, should be made simpler.
- Trade Missions Abroad: To effectively assist Indian exporters, India’s trade offices abroad require additional funding and qualified personnel.
- Funding for Export Promotion: More funds must to be set aside for programs that help a wide number of small exporters rather than just a select few big businesses.
Mr. Trump took to social media to point to India’s trade tariffs and non-tariff measures, as well as its energy and military equipment deals with Russia, as the primary justifications for the 25% tariffs and penalty. Although the exact nature of the fine is still unknown, Mr. Trump has previously threatened to impose an additional 10% tariff on the BRICS nations. Effective duties on Indian imports would be 35% if this were to happen. Additionally, a bill that would impose an additional 500% tariff on China, Brazil, and India for their trade with Russia is currently being considered in the United States.
GST reductions to increase domestic spending
The present four tiers of the GST structure will be replaced with a more straightforward two-tier scheme. The current 12% and 28% tax rates on some items will be lowered to 5% and 18%, respectively. This plan has been approved by a group of state finance ministers and is pending final approval by the GST Council, which is led by Finance Minister Nirmala Sitharaman.
The Modi administration believes that lower GST rates will boost consumer spending, especially on necessities like clothing and food. This tax cut might boost nominal GDP growth by 0.6 percentage points over a 12-month period, citing IDFC First Bank’s study.
