India can leverage US tariff threat for mutual reductions: Arvind Panagariya
The Chairman of the 16th Finance Commission, Arvind Panagariya has said that looming threat of reciprocal tariffs from the US could be turned into a positive if India can leverage it to secure mutual tariff reductions. However, he cautioned that if it results in a tariff war, where the US imposes tariffs on India and New Delhi retaliates with its own tariffs, it would have an 'unfortunate' outcome. US President Donald Trump on multiple times said that America will impose reciprocal tariffs against India and alleged that India is a 'tariff king' and 'tariff abuser'. US’ 25 per cent tariff on steel and aluminium will in effect on March 12.
While talking about India’s competitive advantage and access to US markets he said that the country has a very good opportunity to do a win-win bargain on reciprocal tariffs, as India’s economic liberalization makes it more competitive and through reciprocal tariff bargain Indian sectors such as textile and clothing can get better access to US markets. However, he warned that if the both sides end up in a kind of tariff war in which the US impose tariffs on India and India retaliates with imposing tariffs on US will not be advantageous for either side.
In Prime Minister Narendra Modi ’s recent visit to Washington, India and the US announced their commitment to more than double the two-way commerce to $500 billion by 2030 and negotiate the first tranche of a mutually beneficial, multi-sector Bilateral Trade Agreement (BTA) by fall of 2025. During 2023-24, the US was the largest trading partner of India with $119.71 billion in bilateral trade in good ($77.51 billion worth of exports, $42.19 billion of imports, with $35.31 billion trade surplus).
