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India puts import tariffs on hold till August 4 considering trade negotiation with US

While India could have imposed the retaliatory tariffs on US imports right away, but it is allowing US some time ahead of a trade package negotiation between the two nations.

twitter-logo BusinessToday.In        Last Updated: June 21, 2018  | 19:35 IST
India puts import tariffs on hold till August 4 considering trade negotiation with US

India will reportedly bring its retaliatory tariffs on United States imports into effect from August 4. The delay is in light of upcoming trade negotiations with the US, said a Livemint report. New Delhi has decided to impose import tariffs on 30 US items in response to Trump administration's decision of imposing heavy tariffs on steel and aluminium exports from India. India has already notified the revised list of items that will attract retaliatory import tariffs to the World Trade Organisation (WTO).

While India could have imposed the retaliatory tariffs on US imports right away, but it is allowing US some time ahead of a trade package negotiation between the two nations, the report said. Assistant United States Trade Representative Mark Linscott is expected to visit India next week to kick off the negotiations, the report said.

India presented a revised list of 30 items to the WTO that will attract import tariffs. After the tariffs are in place, these items will incur custom duties increased by up to 70 per cent. This list includes almonds, apples, boric acid, Bengal gram, chickpeas, lentils, artemia shrimp, pears, nuts, iron and steel products, flat rolled products of stainless steel, other alloy steel, tube and pipe fittings, screws, bolts and rivets. This list also included motorcycles with an engine capacity of 800cc or more, which would bring iconic brands like Harley Davidson and Indian Motorcycles, but they might have been struck out, as per a PTI report.

ALSO READ:4 reasons why trade war with US could weaken rupee further

India has planned to impose retaliatory tariffs on import of 29 products worth $241 million to cancel out the burden it faces due to import tariffs imposed by the US. However, New Delhi cannot be hasty to wage a trade war against the US as it may turn counterproductive. India's highest imports from US are very critical in nature like nuclear reactors, boilers, mineral fuels, aircrafts, space crafts, medical equipments etc. Any higher duty on these products will impact India's key sectors. While the US or its companies could absorb the impact, India and Indian companies don't have the kind of strength, which a developed country has to absorb the higher costs.

A trade war could also weaken rupee further and even hit the Indian economy hard, which has finally started on the road to recovery after several shocks due to policy reforms.

Earlier this year, Donald Trump approved a 25 per cent tariff on steel and 10 per cent tariff on aluminium products imported by the United States citing national security reasons. While some economies, including US neighbours Canada and Mexico, have been exempted from these tariffs, others affected by them did not react positively. Apart from India, China and the European Union have also vowed to respond in kind if the Trump administration refuses to withdraw the import tariffs on steel and aluminium imports.

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