India’s Strategic Trade Moves: How Budget Changes Impact U.S. Imports & Tariffs

New York: In the recently submitted budget, taxes on several U.S. import goods were reduced. It is being speculated that India is planning to take advantage of this to avoid U.S. tariffs.

The budget has fully exempted 36 life-saving drugs, including those for cancer and certain rare diseases, from the Basic Customs Duty (BCD), resulting in lower prices. Additionally, only a 5% tax will be levied on six essential medicines. The government has also removed duties on key minerals such as cobalt and lithium-ion battery scrap, making it easier for industries to source these materials domestically, thereby reducing the prices of products manufactured from them.

Two new types of looms used in textile production have been exempted from taxes, leading to a reduction in fabric and clothing costs. Import duties on components used in manufacturing LED/LCD TVs and mobile phone batteries have either been reduced or exempted to encourage local production. The tax on lithium batteries used in mobile phone manufacturing has also been lowered. Additionally, the export duty exemption for handicrafts has been extended, allowing exporters to ship goods more easily. Raw materials for shipbuilding and repairs will be tax-exempt for the next ten years. Many of these exempted products originate from the U.S., leading to speculation that India is strategically aiming to avoid U.S. tariffs.

India’s Master Plan to Counter U.S. Tariffs

Reports suggest that India has devised a strategy to counter U.S. trade policies. India is reaffirming its stance on continuing trade in U.S. dollars and has already communicated to BRICS nations that it does not support introducing a BRICS currency. In unofficial discussions, India has reportedly conveyed this message to BRICS members.

India is also considering reducing tariffs on U.S. goods and increasing imports of chemicals from the U.S. Additionally, India may increase purchases of U.S. products such as soybeans, dairy products, automobiles, medical devices, aircraft, electronics, high-tech machinery, and textiles.

U.S. President Donald Trump is expected to announce new tariff policies next week. Reports indicate that Trump is planning to impose reciprocal or even higher tariffs on countries that impose duties on U.S. goods.

On February 12 and 13, Indian Prime Minister Narendra Modi is scheduled to visit the United States. Trump is expected to announce his tariff policy before Modi's arrival in Washington, D.C., and there are concerns that India may also be affected by these new tariff measures.