India trade boost: US exempts select farm goods from reciprocal tariffs; GTRI sees marginal gains
India could secure a marginal competitive advantage in a select group of agricultural products after the United States removed several items from its reciprocal tariff list, the Global Trade Research Initiative (GTRI) has said in a new analysis.A White House Executive Order issued on November 12 exempted coffee, tea, tropical fruits, fruit juices, cocoa, spices, bananas, tomatoes, beef and some fertilizers from the 25–50 per cent reciprocal tariffs imposed on April 2. These goods will now face only standard MFN duties, with the exemption taking effect on November 13.
Narrow gains for India
According to GTRI, India’s immediate export gains will be limited because its presence in the newly liberalised tariff lines is small. Of the United States’ $50.6-billion import basket for these products, India supplies just $548 million, dominated by a handful of high-value spices and tea.“India exports pepper and capsicum preparations worth $181 million, ginger-turmeric-curry spices at $84 million, and anise-cumin seed categories at $85 million. Tea exports stand at $68 million,” said GTRI co-founder Ajay Srivastava.However, India has “almost no presence” in some of the largest tariff-exempt categories such as tomatoes, citrus fruits, melons, bananas, fresh fruits and fruit juices, the analysis noted.US global imports in these categories are sizeable:
- Coffee: $9 billion
- Tropical fruits & avocados: $6.1 billion
- Fresh fruits: $6.3 billion
- Tomatoes: $3.8 billion
- Bananas: $3.2 billion
- Fruit juices: $4.3 billion
India’s share in many of these is negligible — including zero exports in tomatoes, citrus fruits and melons, and less than $0.5 million in bananas.GTRI said the exemption reflects Washington’s need to keep duties low on items “not produced domestically in adequate quantities or dependent on climate conditions the US cannot replicate.”The think tank said that it remains unclear whether Indian shipments will be exempt from the 25 per cent reciprocal tariff alone or from the full 50 per cent rate as well. The interpretation of the new order “will determine whether India gains meaningful price competitiveness” in select products, GTRI said.Bigger beneficiaries lie elsewhereWhile the policy shift marginally strengthens India’s position in spices and niche horticulture, GTRI cautioned that most of the gains will accrue to Latin American, African and ASEAN exporters that already dominate US imports of fruits, juices and other exempted lines.“The broader gains will go to countries with scale, strong cold-chain infrastructure and diversified agricultural export baskets,” Srivastava said.
Source – GTRI report
