Indian exporters of small engineering goods are advocating for a reduction in import tariffs on certain US goods, Reuters reported on Wednesday.
This strategic move is aimed at securing more advantageous trade terms with the United States, particularly in light of President Donald Trump’s impending implementation of new tariffs on steel and aluminum imports.
The head of an Indian industry body representing small engineering goods exporters has asked the government to decrease import tariffs on certain US goods according to the report.
Concerns among exporters
The implementation of a 25% tariff on steel and aluminium imports by the US, set to take effect on March 12, has triggered significant apprehension among Indian exporters.
These concerns primarily stem from the anticipated repercussions of these tariffs, which include a potential decline in orders from US buyers and an increase in the overall cost of exporting these metals.
The decline in orders is a direct consequence of the increased price of Indian steel and aluminium in the US market due to the tariffs.
This price increase could make Indian metals less competitive compared to domestic US metals or imports from other countries that are not subject to the tariffs.
As a result, US buyers may choose to source their steel and aluminium from alternative suppliers, leading to a reduction in orders for Indian exporters.
Furthermore, the tariffs could also indirectly increase the cost of exporting steel and aluminium from India.
For instance, if the tariffs lead to a decrease in the volume of steel and aluminium shipped to the US, shipping companies may increase their freight rates to compensate for the reduced demand.
This would raise the overall cost of exporting these metals for Indian exporters.
Large volumes at risk
Pankaj Chadha, chairman of the Engineering Export Promotion Council was quoted in the report:
Of India’s $20 billion annual engineering goods exports, nearly $7.5 billion worth of shipments could be affected.
The council represents more than 10,000 small exporters.
The EEPC and other industry chambers have appealed to the government to decrease tariffs on specific US goods that have low inbound shipments, according to Chadha.
They anticipate that a reduction in these tariffs might encourage the Trump administration to propose agreeable terms and advance a potential bilateral trade deal.
Trump had previously called India a high-tariff country and also threatened to impose “reciprocal tariffs” from April.
Piyush Goyal, India’s trade minister, is currently in the US to discuss a potential trade deal.
The negotiations will include possible tariff reductions and an evaluation of the effects of the reciprocal tariffs proposed by Trump.
Chadha suggested that India could offer concessions on selected agricultural and manufacturing items.
Additionally, India could reduce tariffs on nuts, castings, and forgings, while cutting import duty on US steel scrap from 7.5% to almost zero.
Exporters are concerned that India’s planned safeguard duty of up to 14% on steel imports will increase domestic steel prices and reduce their profit margins.
The duty is intended to protect local steel manufacturers from cheaper Chinese imports.
India’s exports
In January, India’s engineering goods exports to the US saw an 18% year-on-year increase, reaching $1.62 billion.
EEPC data reveals that this growth surpasses the overall engineering sector’s 7.44% expansion, recorded before the implementation of tariffs.
The first ten months of the fiscal year, from April 2024 to January 2025, saw a 9% rise in engineering exports to the US, reaching $15.6 billion.
This increase was fueled by greater shipments of aircraft parts, electrical machinery, automobiles, industrial machinery, and medical instruments.
Chadha said:
The engineering industry faces major challenges, and the latest US tariffs add pressure. Continued government support in export credit and technology is crucial for competitiveness.
Engineering exports from India, which comprise 25% of the country’s total merchandise exports, increased to $9.42 billion in January, up from $8.77 billion the previous year.
This figure, however, was lower than December’s $10.84 billion.
Data from EEPC shows that from April to January, cumulative exports increased by 9.82% year over year, reaching $96.75 billion.
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