There was a big festival-like celebration when the news that the USA had reduced tariffs on India from 50% to 18% was announced.
The stock markets shot up, and the Sensex surged by over 2,000 points. However, after a day of contemplating the conditions set by the USA and observing the overall scenario, the markets came down.
Trump stated that India agreed to stop buying oil from Russia and also agreed to purchase American goods worth $500 billion annually.
However, India’s annual imports are approximately US $915.19 billion as per the latest records. This means Trump is implying that India should concentrate close to 50% of its total imports budget on the USA alone.
India, however, has remained silent on both the Russian oil condition and the $500 billion deal. Moreover, Russia has also stated that there is no confirmation from India that it is stopping the purchase of Russian oil.
Amid these silences, how can India really consider that tariffs have been cut to 18%? The basic tariff levied by Trump was 25%, and an additional 25% was imposed as a punitive tariff for buying Russian oil.
So even if we assume that the basic tariff has been reduced from 25% to 18%, the punitive tariff of 25% for buying Russian oil can be withdrawn only after official confirmation from India.
Therefore, should we understand that the tariffs remain the same as ever until the USA and Russia receive clarity from India.
We need to wait and see what unfolds, when and how. Nation needs a clarity on this.