India’s Commerce and Industry Minister Piyush Goyal on Friday (August 29) spoke about diversifying India’s exports, underlining the need to identify which sectors could benefit from alternate markets, after the US tariff of 50% on Indian exports came into effect this week.
The additional 25% tariff levy announced by the US administration on Indian exports took effect on Wednesday, August 27. With this, the total levy on Indian exports to the US stands at 50%.
Referring to the steel sector’s commitment to exporting 50 million tons of steel as part of the diversification of the export basket, Minister Goyal said that there is a need to know which sectors have room for expansion to alternate markets.
He further said that the shortage of 1 million homes in Australia is a big opportunity for skilled professionals like masons, electricians, and plumbers in the country to get certification for Australian standards.
“It’s an opportunity worth over billions of dollars, the financial sector will get a boost, imagine the scale,” Goyal said. Success in Australia may lead to a demonstration effect, other developed nations may queue up to benefit from our skilled labour, he added.
Besides, infrastructure development gives a multiplier effect on GDP while the gems and jewellery sector alone can take India to newer heights, Goyal said.
Domestic demand and exports
On the much-discussed topic of proposed goods and services tax (GST) reforms, the Minister said that the GST council meeting next week may spur domestic consumption. Under the proposed reform, the Union government is looking to simplify the tax structure with a two-slab structure and a 40% rate.
Coming down heavily on the US tariffs, Goyal remarked that the self-confidence of 140 crore Indians won’t tolerate any type of discrimination. However, Goyal also pointed out that India still remains an import-dependent economy, with only 2% of the country’s GDP coming from trade. “Our global market share is too small,” he said.
Expressing faith in the domestic industry’s capacity to deal with tariff hurdles, Goyal said, “Our industry has dealt with nuclear sanctions, a COVID pandemic,” adding that India’s exports this year will be more than our exports in the previous year.
Unlocking new frontiers
Referring to already concluded free-trade agreements with developed countries like Australia, the UAE, and the EFTA bloc, the Minister assured that India is “confident of forging ahead and capturing new markets.”
The FTA negotiations between India-EU are moving fast, and the EU’s negotiating team coming to India next month, Goyal said. The Commerce Secretary is headed for conducting further discussions with the EU tomorrow, he added.
Meanwhile, the India-Oman FTA is likely to be finalised soon. Moreover, a Qatari Minister had expressed enthusiasm about concluding an FTA with India yesterday, Goyal added.
Currently, India is negotiating FTAs with the Russia-led Eurasian Economic Union, Chile, Peru, and New Zealand.
India-Africa business conclave
Separately, speaking at the 20th CII India Africa Business Conclave, Goyal said that India and Africa could export goods to each other that have been impacted by sanctions from third countries
Africa imports vehicles worth 20 billion, but India accounts for only 10%, the Minister said, adding that India can import more pulses, oil from Africa, and export more automobiles, dairy products.
Moreover, unified payment interface (UPI), India’s homegrown digital payment solution, can help bring cost of transactions, remittances for Africa while making its financial sector more stable.
India’s trade with Africa hasn’t doubled over the past ten years, which shows significant untapped potential, Goyal said. One of India’s companies is a large telecom provider in Africa, and medical tourism to India also holds huge promise, according to Goyal.
It is imperative to reduce non-tariff barriers, help self-help groups, and work on education and skill development between India and the African economies, the Commerce Minister concluded.
