Navigating Trump's Tariffs: India's Telecom and Agriculture Sectors Hit Hard

India's telecom and agriculture sectors face significant challenges due to rising U.S. tariffs, impacting billions in exports. An EY report advocates for strategic initiatives like fast-tracking the Bilateral Trade Agreement and extending the Production Linked Incentive. Retaining competitive edge hinges on strategic policies and trade negotiations.

The sectors of telecom and agriculture in India are confronting substantial obstacles following the imposition of heightened tariffs by U.S. President Donald Trump, according to a report by EY. The telecom industry is experiencing a tariff hike from zero to 26 percent as of April 9, 2025, affecting its USD 6 billion exports to the U.S. Despite this, India remains more competitive than China and Vietnam, who are enduring even steeper duties.

The EY report suggests that initiatives like Mission 500 and a swift completion of the Bilateral Trade Agreement (BTA) with the U.S. could mitigate these challenges. Additionally, extending the Production Linked Incentive (PLI) scheme past 2026 could bolster growth. Meanwhile, the agriculture sector is grappling with tariffs skyrocketing from 4 percent to 31 percent, impacting USD 5.5 billion worth of exports. This situation threatens the sector's competitiveness and expansion.

While India holds a comparative advantage in global trade against countries such as China and Vietnam, it falls short compared to nations like Canada and Mexico, who enjoy lower tariffs and larger market shares. EY emphasizes the necessity for India to finalize the US-India BTA, given agriculture's economic significance. The auto components sector also faces pressure, with exports to the U.S., worth USD 2.1 billion, now subject to a 25 percent tariff, an increase from the previous 2.5 percent.

This tariff increase affects essential components like engines and transmissions. Since the duty is uniform across all countries, India gains no special advantage over other exporters like China. The report advises India to advocate for concessional tariffs during trade negotiations. The textile sector, exporting USD 9.5 billion to the U.S., will encounter tariffs between 33 percent and 36 percent. Despite a 27 percent increase, India maintains a relative advantage over competitors like China and Vietnam, who face even higher tariffs.

The report concludes that although heightened U.S. tariffs pose significant challenges to India's export sectors, the nation's manufacturing prowess and strategic policies can keep its competitive edge. Progress on bilateral agreements and policy support remain crucial for sustaining growth. (ANI)

(With inputs from agencies.)