Will GST Reforms Absorb US Tariff Impact? Here's What Experts Think

With additional US tariff sword about to drop on India's neck on Wednesday, everyone is trying to mull over a way to combat them or at least absorb the shockwaves it will generate for the Indian market.

"I don't see a change that the 50% tariff is not going to come in tomorrow," Trade Nation's David Morrison told NDTV Profit.

On the other end of the spectrum, India is going through a major tax revamp with the four-slab GST system in place being speculated to be rolled into a two-slab system. This move is likely to increase liquidity in the hands of the consumers. However, will it be enough to soften tariff impact?

According to Jayant Krishna senior fellow at Centre for Strategic and International Studies, the GST reforms are good and will generate domestic demand, but on the other side of the coin will also lead to revenue loss on the government's end.

"It remains to be seen how cost neutral that reform would be; surely some demand stimulating would happen so some volumes, which are getting compromised due to export slowdown, will get compensated through domestic demand," he added.

But he highlighted how most of the goods and products that India exports to the US do not have the kind of margin to offset a 50% rate of tariff.

"Countries don't get what they deserve; they get what they negotiate," the senior fellow stated while underlining that the need of the hour is to restart trade talks with the United States. At the same time, he emphasised that agriculture and dairy should remain protected sectors in India to safeguard interests of small farmers and entrepreneurs.

All the experts, though, expect that this will be a painful period for the nation and hope that peace will prevail soon enough once the negotiations begin again.