New Delhi, February 8 Commerce and Industry Minister Piyush Goyal said on Sunday that Indian goods will have a competitive advantage in the US market compared to products from China and other competing countries, which face higher tariffs, following the reduction in reciprocal tariffs to 18 percent.
India and the US have finalized the a framework for the first phase of the bilateral trade agreement, which is expected to be signed by mid-March.
Goyal said that reciprocal tariffs (RTs) on India are now among the lowest compared to its competitor nations.
These countries include China (35 percent), Thailand (19 percent), Myanmar (40 percent), Cambodia (19 percent), Bangladesh (20 percent), Indonesia (19 percent), Brazil (50 percent), and Vietnam (20 percent).
With lower tariffs, India's labor-intensive sectors, such as textiles, leather and footwear, handicrafts, chemicals, and gems and jewelry, will be more competitively priced in the US market compared to these nations.
"So, we have to see our competitive advantage over others. And comparatively, India's RTs among our peer countries, emerging market economies, and developing countries are amongst the lowest.
"So, therefore, we have an advantage over China's 35 percent, and we are 18 percent," he told
He added that the comparative advantage always gives a country an edge in global markets.
"The important thing is competitive advantage. Even when we reduce our tariffs (for US goods), it's about competitive advantage," he said.
Goyal also dismissed criticism that New Delhi conceded too much by accepting the 18 percent tariff while offering duty concessions to American goods.
He was replying to a question whether India reducing its customs duties, while the US is only cutting its reciprocal tariffs, puts India at a disadvantage.
"I don't think this is a material issue at all. When some people talk about it or try to highlight this, it only reflects that they don't understand international trade and they're only trying to mislead the people," he said.
He added that businesses, exporters and industry associations understand these issues and have welcomed the agreement.
"...because they realize the massive trade advantage that this is going to give India. And it will ultimately help our farmers. We are today one of the largest exporters of farm products...we are exporting 55 billion dollars of farm and fish products every year. 5 lakh crores. All of that is income for our farmers...It'll certainly give them a much bigger value for the farm produce, and farmers' incomes will increase," Goyal said.