U.S. tariffs will have long-term effect on trade: Commerce Ministry to PAC, Pg11

Key Highlights:

• The U.S. imposed higher tariffs on Indian goods, particularly affecting marine exports.
• A 50% duty implemented in August significantly impacts India’s shrimp exports, leading to an effective levy exceeding 58%.
• The Commerce Ministry informed the Public Accounts Committee (PAC) about the long-term impact of these tariffs.
• India is actively pursuing Free Trade Agreements with blocs like the European Free Trade Association (EFTA) and the U.K. to counter the impact.

Detailed Insights:

• The PAC raised concerns about the impact on coastal towns due to potential decline in shrimp exports.
• India's key competitor, China, is also facing similar tariffs, mitigating concerns about the pharmaceutical sector.
• Rajesh Agarwal acknowledged that the high tariffs place India at a disadvantage compared to competitors.
• India is focusing on market diversification by registering more marine export units in the EU and engaging with countries like Russia.
• The PAC expressed dissatisfaction with the Export Promotion Capital Goods Scheme, under which duties worth ₹42,714 crore were forgone between FY19-21.
• The government has been directed to provide clear answers on how the Export Promotion Capital Goods Scheme has aided growth in the manufacturing sector.

Key Concepts Involved:

• Tariffs: Taxes imposed on imported goods, increasing their price.
• Free Trade Agreement: Pact between countries to reduce trade barriers.
• Export Promotion Capital Goods Scheme: Policy to facilitate import of capital goods for enhancing manufacturing competitiveness.