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The rapidly rising prices of food items in America forced President Donald Trump to remove the tariff increase imposed on more than 200 food products. This decision is expected to provide great relief to Indian tea, coffee, spices and cashew exporters. Experts believe that this may lead to new demand and improvement in Indian agricultural exports.
New Delhi. The rising prices of grocery items in America forced President Donald Trump to take a big step. The Trump administration has withdrawn the tariff increase imposed on more than 200 food items. India’s tea, coffee, spices and cashew exporters are expected to benefit the most from this. Experts believe that this can give a new lease of life to Indian agricultural exports.
Pressure on grocery prices, Trump had to give relief
Continuously rising grocery prices in America had increased consumer dissatisfaction. Additional tariffs imposed by Trump on more than 200 food products, including beef, made the situation worse. Countries like Europe and Vietnam were imposed 15–20 percent duty, while India was significantly impacted by increasing the tariff by up to 50 percent. In such a situation, to increase the supply in the American market and keep the prices under control, Trump had to give tariff exemption to many products. Ajay Saha, DG of Federation of Indian Export Organizations (FIEO), says that Indian exports worth about $ 2.5-3 billion will directly benefit from this step.
Tea, coffee, spices and cashew nuts will get a boost
Tea, coffee, spices and cashew nuts, considered the backbone of Indian agricultural exports, can make a comeback with new strength in America. According to officials, this step will not only increase demand but will also create a positive environment in US-India trade talks. After the increase in tariff this year, India’s exports to America had declined by about 12 percent to $5.43 billion. Of these, agricultural exports account for about $5.7 billion. In such a situation, tariff exemption has brought great relief to Indian farmers and processing industry.
Will the benefits be limited?
According to Ajay Srivastava, founder of Global Trade Research Initiative (GTRI), India will definitely benefit, but this gain will be limited. The reason is India’s weak market share in many tariff-exempt products like tomatoes, citrus fruits, melons, bananas and fruit juices. Latin America, Africa and ASEAN countries have a strong share in these categories, hence more benefits will accrue there. Besides, Indian exporters will also have to contend with tough competition from Vietnam and Indonesia, increased freight costs and strict American quality standards.
What next for India?
Although challenges exist, the tariff exemption brings huge opportunities for India. Exporters believe that the relief is a beginning, real success will come only when India strengthens logistics and increases value-added products. Premium and specialty categories are growing rapidly in the American market. Experts say that if India adopts an aggressive strategy in these high-quality segments, it can achieve strong growth in the long run. Tariff exemption has opened the door. Now it is India’s turn to take full advantage of this opportunity.
