Leverage India’s massive diaspora networks in the U.S. to counter Trump’s tariffs, top industry body advises govt

New Delhi-based industry body, the PHD Chamber of Commerce and Industry (PHDCCI) has said that the government must leverage India’s diaspora networks in the U.S. as a countermeasure to minimise the impact of U.S. President Donald Trump’s tariff threats against Indian goods to gain market access in that country.

In a white paper released in Delhi today, the association called for direct negotiations with major U.S. retailers like Walmart, Target and Amazon for bundled pricing to remain competitive in the US market in spite of Trump tariffs.

The US has threatened to levy an additional 25% tariff on all goods originating from India from August 7. Trump has also said India will also face a big penalty over and above the extra tariff for continuing its economic relationship with Russia against US wishes.

The multipronged measures suggested by PHDCCI to counter Trump’s punitive tariffs include securing long-term offtake agreements to stabilize demand, developing premium variants of export lines with higher value acceptance, co-innovation with US buyers on custom specifications and launch of "Make in India Select" premium sub-brands in the US.

The whitepaper also calls for redirecting volumes to EU (15% tariff), Canada (20% tariff), Latin America (10% average) where the tariffs are much lower than what is going to be levied by the US. Fast-track FTA utilization (India-UK, India-ASEAN), positioning as a “China-plus-one" sourcing destination for global buyers, joint ventures for on-shore US production, deployment of agri-tech solutions in US specialty crop regions etc have all been proposed as possible ways to resist Trump’s tariff war against Indian exports.

"India's robust domestic demand and diversified economy provide resilience. Our analysis shows the impact, though significant in absolute terms, remains manageable at the macro level. This presents an opportunity for Indian businesses to accelerate market diversification and value addition strategies”, Ranjeet Mehta, CEO & Secretary General, PHDCCI, said.

While the full impact of Trump’s anti-India measures will be clear only after the quantum and nature of penalty he is going announce against India is known, PHDCCI says that the 25% tariff hike from August 7 will not hit India very adversely. According to PHDCCI, the impact on engineering goods exports from India because of the 25% tariff hike by U.S. will be $1.8 billion. The impact on electronic goods is estimated to be $1.4 billion; pharmaceuticals $986 million; gems & jewellery $932 million; and ready-made garments $500 million, and not more.

“The impact represents only 1.87% of India's total global merchandise exports. As after as its impact on India’s GDP is concerned, it is projected at a negligible 0.19%”, the whitepaper argued.