Global Trade and Tariff Pressures: How India’s Exports Are Getting Squeezed
Business News | Economy & Trade | India News
Introduction
Global trade is facing fresh turbulence as tariff battles intensify between major economies. India, one of the world’s fastest-growing markets, is finding itself in the crossfire. From U.S. tariff hikes on select Indian goods to Europe tightening trade norms, exporters are navigating higher costs, policy uncertainty, and shrinking margins.
U.S. Tariffs Add Pressure on Indian Exporters
Recently, the United States imposed additional tariffs on several Indian export categories, including textiles, leather products, and seafood. These sectors, which employ millions and contribute significantly to India’s foreign exchange earnings, are feeling the squeeze. Exporters warn that reduced competitiveness could mean lower orders in the upcoming holiday season in the West.
Trade analysts say Washington’s move is partly driven by its domestic politics and efforts to shield American manufacturers. For India, however, the timing is tough, especially when global demand is already slowing.
EU Trade Talks: A Balancing Act
While the U.S. adds tariffs, India is working to deepen trade ties with the European Union. Negotiations are ongoing to finalize a Free Trade Agreement (FTA) that could open up opportunities for Indian pharmaceuticals, IT services, and green tech exports.
However, EU negotiators are pushing stricter rules on sustainability and carbon emissions, which means Indian industries may need to invest more in compliance. For small and medium exporters, that adds cost and complexity.
Domestic Relief: GST Cuts to Boost Consumption
To offset global trade stress, the Indian government has announced GST simplification and rate cuts. Hundreds of consumer goods will now fall into either a 5% or 18% tax slab, replacing the earlier multi-tier system. Officials believe this will spur domestic demand, which could help absorb some of the goods that face weaker exports.
Finance experts point out that while the government may face a ₹48,000 crore shortfall in revenue, stronger consumption could balance the books over time.
Broader Global Context
The tariff war is not limited to India. Worldwide, protectionist policies are gaining ground as countries attempt to safeguard domestic jobs and industries. But economists warn this could backfire by slowing down global growth, increasing inflationary pressures, and pushing emerging markets into trade deficits.
The World Trade Organization (WTO) has already flagged concerns about a rise in unilateral tariff actions, which weaken multilateral frameworks. For India, which is still building its global trade influence, the lack of stability is a major concern.
Expert Opinion
“India is resilient, but exporters can’t absorb every tariff shock,” says Arvind Mehta, a senior trade policy analyst. “The government must negotiate hard in Washington and Brussels while also supporting exporters with cheaper credit and logistics incentives.”
Conclusion
Global trade and tariff pressures are reshaping the way India does business. While the U.S. tariffs create near-term challenges, India’s ongoing talks with the EU and efforts to boost domestic demand through GST reforms could provide some relief. The big question is whether protectionist trends worldwide will ease, or if Indian exporters must adapt to a new normal of unpredictable trade rules.