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Table of Contents
INDIA, US DUTIES
•In a notification recently, India hiked duty on 29 items imported from the US.
•This was in retaliation against a US announcement in March imposing tariffs on steel and aluminium items —25% and 10% respectively — imported from all countries
INDIA – U.S TRADE WAR
As per UN COMTRADE-WITS data sourced by the government, US imports steel items worth
approximately $795 million and aluminium products worth $424 million from India.
The US move will help it collect an additional $241 million on imports from India — about $198.6 million from the duty on steel products, and $42.4 million from the duty on aluminium goods.
India told the World Trade Organization (WTO) that it plans to increase the customs duty on 30
products imported from the US. It told the WTO that it has decided these additional duties in
a way that it would help the government earn an additional $241 million.
OFFICIAL STATEMENT
“India wishes to clarify that suspension of concessions shall be equivalent to the amount of
trade affected by United States’ measures.
To this end, India reserves the right to adjust the specific products for which suspension of
concessions is effectuated(put into force or operation), and its right to adjust the additional
rate of duty imposed on such products,” India said
HARLEY-DAVIDSON MOTORCYCLES
The 30 items listed by India included lentils, boric acid, fresh apples and shelled almonds. Another product listed was motorcycles with internal combustion engine
capacity over 800 cc.
India left out such motorcycles and announced imposition of duties on the 29 other products.
NOTES
• In the original list to the WTO, India had said it may impose an additional duty of 50% on such motorcycles. This measure was targeted at Harley-Davidson motorcycles. In an address to a joint session of Congress in 2017, US President Donald Trump had hinted at mistreatment to companies such as Harley-Davidson by way of high import duties, up to 100% in some markets, but he did not name India.
On February 26, days after India abruptly announced slashing of duties on imported motorcycles, Trump made it clear that he did not think these this was enough.
• These motorcycles constituted a small fraction of the overall trade involving the 30-product list. In 2017, India imported motorcycles (over 800 cc) worth $10.6 million.
ALMONDS
Of the duty-hiked 29 products, the category that will bring in the highest additional duties is almonds that are fresh or dried in shell. According to Indian government estimates, India imported such almonds worth $580.63 million from the US in 2017. On Wednesday, India
increased the duty from Rs 35 per kg to Rs 42.
This means it will earn additional duty of $116.13 million from almonds in shell alone.
BALANCE
India has calculated that it will be paying about $5 billion a year for aircraft and about $4 billion for purchase of oil and gas from the US.
This is apart from defence purchases + where India is now looking at buying 12 more naval surveillance aircraft P8i. India is now the largest owner of these aircraft outside the US.
INDIA-US RELATIONS?
• Sanctions have the annoying habit of popping up every now and then in the tapestry of India-US relations and putting strain on the relationship. Cases in point are the post 1974 sanctions and post 1998 sanctions.
• 2018 is worse – the fresh sanctions on Russia, new sanctions on Iran now that the US has withdrawn from the JCPOA and finally, trade tariffs imposed by the US on imports from other countries
INTERNATIONAL NORTH SOUTH TRANSPORT
CORRIDOR
Now that the US has withdrawn from the JCPOA, in addition to CAATSA, fresh unilateral sanctions have been imposed on Iran.
These will affect India’s oil trade with Iran, its third biggest source of oil in 2017.
It will also affect the progress of the International North South Transport Corridor, which could have become an alternative to China’s Belt Road Initiative. Key to the success of the INSTC is
the Chabhahar port in Iran.
U.S NEEDS TO REALIZE
The US needs to realise that these tarrifs will slow down India’s military and economic growth. An economically and militarily weak India will be of no use to Washington in defending and
strengthening the liberal order in the Indo Pacific.
If Washington wants a strong India, it will need to work out ways in which these sanctions have little impact on India. Otherwise, India might well be justified in thinking that Washington only
wants to use India as a cat’s paw for containing China without really being invested or interested in the country’s rise in the long term
CHANGE IN INDIA’S FOREIGN POLICY
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