Trump Tariff Hike: Indian Exporters Unlikely To Shift Manufacturing Abroad, Says FIEO Chief
Trump has already imposed a 40% tariff on transshipment, and violation will entail huge penalties, said Sahai.
Indian exporters are unlikely to relocate manufacturing operations to other countries to circumvent the steep tariffs imposed by the United States, said Ajay Sahani, Director General and CEO of the Federation of Indian Export Organisations, in response to the latest cumulative 50% tariff announced by US President Donald Trump.
In a blanket move, the Trump administration has levied an additional 25% tariff on Indian imports, citing India's continued purchase of Russian crude oil. This brings the total tax burden to 50%, matching the levels imposed on Brazil. The news duties will come into effect on August 27
Reacting to the development, Sahai said, "As long as the tariff was 25% the exporters were looking into the option of absorbing and even approaching the government for support. But absorbing a 50% tariff when competitors face a differential tariff of 30-35% is not possible."
He added that the impact would be uneven across sectors. "The only good news is that roughly 45% of our total trade, including pharma and smartphones, has been exempted from duty."
The segment may remain unaffected for now. But, how long that will remain unaffected is uncertain.
The FIEO chief also dismissed the idea of rerouting trade through other companies to avoid tariffs citing risks involved. "I do not think any exporter will look into the option of trading through other companies, Trump has already imposed a 40% tariff on transhipment, and violation will entail huge penalties."
On the possibility of shifting manufacturing, he further added, "Indian exporters are also looking at other countries but it is not possible in short term, you cannot move to new market overnight, it takes time, therefore it is only for medium to long terms that they are also looking at other market including UK and EU countries"
