The Narendra Modi government has retaliated with tariffs on 29 American products after the US ended India's trade concession of about $5.6 billion under the Generalised System of Preferences (GSP). The market has been heating up with pressure which followed 290 points fall in the Sensex after the announcement.
India will be implementing duties as high as 70 per cent on perishable items like almonds and apples as a response to Washington's denial to exempt Delhi from the taxes on steel and aluminium imports.
Looking at the rising tensions by the US-India trade relations, many analysts commented on the sudden retaliation. Here's how some analysts reacted:
The Director-General and CEO of the Federation of Indian Export Organisations (FIEO), Ajay Sahi, said that there will be negligible impact on the US by the tariff hike of $400-450 million over a bilateral trade of $142 billion.
International Monetary Fund (IMF) showed serious concerns stating that the global economy cannot sustain another trade war as the economic growth is already at a standstill because of the US-China issues.
Deepak Jasani of HDFC Securities told IANS, "Local investors will be worried as to how the US could react to this. However, FIIs will wait for any such move by the US before feeling the Indian market." He also added that the US farmers will be affected by the tariffs on walnut, almond, and apples, which might trigger a negative response for the Indian market.
Mayuresh Joshi of Angel Broking stated his concerns about the retaliation leading to an increase in the number of products in the tariff list. He said that the retaliation might hurt investor sentiments and majorly impact the capital markets. He said, "Investors will get into trouble if the additional tariffs are applied."
India is the world's third-largest economy but is US's 13th largest export market. At the same time, the US is India's largest export market.