The United States has announced an exemption to a wide variety of agricultural and processed-food items from reciprocal tariffs to ease domestic inflation, a move likely to benefit India's exports, which had been hit by President Donald Trump's April tariff announcement.
Trump announced, in an executive order, that the US government was scrapping tariffs on coffee, tea, tropical fruits, nuts, spices and several other commodities.
The White House administration released a revised list — Annexure II — of goods exempted from country-specific reciprocal tariffs imposed in August this year. The order, which became effective from November 13, comes amid mounting pressure on Trump administration to combat rising consumer prices.
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The exemptions covering 254 products, including 229 agricultural items, account for around $1 billion of India's exports to the US.
How the US tariff cut will affect Indian exports
The US removing reciprocal tariffs from over 200 food products is seen as a positive signal for the Indian agro exporters, which is set to create new demand after months of lull following April tariff announcement.
{{/usCountry}}The US removing reciprocal tariffs from over 200 food products is seen as a positive signal for the Indian agro exporters, which is set to create new demand after months of lull following April tariff announcement.
{{/usCountry}}While Trump had imposed less than 20 per cent tariffs on European Union and Vietnam, the 50 per cent tariffs on India, the highest for any country trading with the US, hurt crucial sectors, including agriculture and other food products.
The Indian exports to the US fell around 12 per cent in September compared to last year at $5.43 billion after the 50 per cent tariffs announcement.
Several Indian exports, including tea, coffee, spices and cashew nuts, were hit the hardest. However, after months of dip, the development is likely to trigger a resumption of exports from India.
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India exports most of the spices except Thyme to the US, which is worth $358 million and several tea and coffee products worth over $82 million.
Ajay Sahai, director general of the Federation of Indian Export Organisations, has said that the exemption announcement is set to benefit at least $2.5 billion of exports, according to Reuters.
India exports most of the spices except Thyme to the US, which is worth $358 million and several tea and coffee products worth over $82 million. The Indian market is a significant source of cashew exports, spices, and tea.
Indian exports 'concentrated' in few categories
According to a Global Trade Research Initiative (GTRI) report, the Indian exports to the US are concentrated in a handful of high-value spices and niche products.
These include pepper, capsicum, ginger-turmeric-curry spices, cumin seed categories, cardamom, tea, cocoa beans, cinnamon, cloves, and fruit products.
The report said that India has a negligible presence in several exempted lines, including tomatoes, citrus fruits, melons, bananas, most fresh fruits, and fruit juices.