US Tariff Rate Seen At 20%, Immediate Focus On Russian Oil Penalties: Nomura's Sonal Verma
Nomura's Sonal Verma said negotiations are still continuing on 25% reciprocal tariff. In August, the US trade team is visiting India. The Indian team will be open to some concessions.
Nomura is expecting that the final US tariff rate on India will be lower than present 25%. As most competitor countries are taxed at the range of 19–20%, it is likely India may end up with a rate not below it, Sonal Varma, managing director and chief economist (India and Asia ex-Japan) said.
"Negotiations are still continuing on 25% reciprocal tariff. In August, the US trade team is visiting India. The Indian negotiating team will be open to some concessions," she said in an interview with NDTV Profit.
The immediate focus is on penalties on Russian oil imports as these will be more important as far as short-term impact is concerned. The brokerage is also waiting for final tariff rates on various sectors like pharmaceutical, automobiles, electronics etc.
These sectors are roughly about a quarter of India's exports, which is currently unimpacted by US reciprocal tariffs, she said in an interview to India. Pharmaceutical, electronics are exempt as of now hence, the effective tariff rate is 25%. Based on the impact on exports and elasticity of demand of importing sectors, Nomura sees a downside risks of 20 basis points on GDP growth projection, Varma said.
Labour-intensive and low-margin sectors like textiles, gem and jewelry and leather are more exposed to International trade. The margin pressure on these sectors could be significant. There could be an impact on jobs. More targeted support measures are coming from the government.
The support may come for specific export products in a form of interest-rate subvention, duty drawback claims while complying with World Trade Organization norms. The fiscal cost will be shared between Government and banks, she said.
