Rama Krishna Sangem
All last minute efforts made by India to escape from US President Donald Trump’s 50 per cent trade tariffs have gone in vain. The higher rates of taxes on our imports to America will begin from August 27, Wednesday. Then, India and Brazil are the only two countries in the world that attract this higher – 50 per cent – tariffs. A 50 per cent tariff will make imports of each and every sector’s goods will just be impossible to the US as the importers will find it difficult to buy them.
India’s last ditch efforts to placate Trump and his administration have gone waste in the last one month or so. We expected him to relent and at least give us some extension after Trump’s Alaska meeting with Russian President Putin. But, that hasn’t happened. Earlier we hoped for some outcome from a US trade delegation that was supposed to visit New Delhi for talks. But, delegation too cancelled its visit, after a hardened stance by the US president.
Analysts are puzzled over the hardened stance of Trump towards India since recently. His one major reason is India buying more oil from Russia that is still attacking militarily Ukraine. India is unable to sort out the issue as Russian oil is coming cheaper that is suitable to keep domestic petrol and diesel prices stable. Another factor that is holding India back from stopping Russian oil is doing so would wrong signals that the country’s foreign policy is dictated by another country. Unacceptable to India.
Modi readying for tougher times
Now the only solution available to Prime Minister Narendra Modi is to be prepared for tougher times. India must be ready for some economic jolts in the coming months – this may stretch to a longer period like a year? Our exports to the US would definitely come to a halt. That would affect the livelihood of several lakhs of employees in large, medium and SME industries. We may have to forego billions of US dollars of foreign exchange revenue from the US.
RBI may tighten the markets, and markets may see slump and Indian rupee will depreciate further, may even touch 90 mark against the US dollar and gold prices will spiral. More than that, our plans to achieve a higher growth rate of GDP – to above 6.5 to 7 per cent – may not come true. We need to see how the Modi government tackles the situation. How will it find new global markets for our exports and extent financial support to the affected sectors of our industry.
