- 6 weeks ago
In this edition of Newstrack, the focus is on the steep US tariffs of around 50% set to hit billions of dollars of Indian exports. The programme examines how India should navigate and overcome Trump's tariff challenge.
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00:00Good evening, this is the NewsTrack and I'm Maria Shaquille.
00:03India faces a critical moment as steep U.S. tariffs, which are around 50%,
00:09are set to take effect in just a few hours on billions of dollars of Indian exports.
00:15Despite this looming challenge, Prime Minister Narendra Modi projects confidence,
00:20highlighting a significant milestone in Gujarat with the launch of domestic production of EV
00:25battery electrodes. Emphasizing India's democratic strengths, demographic advantages and skilled
00:33workflows, the Prime Minister reassured exporters of government support amidst rising global
00:40protectionism. However, concerns remain high among exporters, particularly in the sectors like the
00:48gems, the textiles, auto parts, metals, where the tariffs threaten jobs and economic growth.
00:55However, India, it seems, is ready as the message that is coming in from the government.
01:02We delve today into how India plans to navigate and potentially overcome this tariff challenge,
01:08starting with the Prime Minister's vision.
01:11Hours before Donald Trump's tariff bomb drops, India is bracing for a trade shock.
01:20Prime Minister Narendra Modi in Gujarat launched local EV battery production, calling it a new chapter
01:46in Make in India, with cars soon to roll out to 100 countries.
01:52He highlighted India's strengths in democracy, demography and skilled manpower.
01:57But back in Delhi, his team is working overtime on relief for exporters.
02:01He has a great power.
02:03The state of democracy has a great strength.
02:06The state of democracy has a great power.
02:12The state of democracy has a great opportunity to help us.
02:29Modi has called the tariffs unfair and protectionist.
02:39He vows India will safeguard its interests firmly but responsibly.
02:59From Tuesday morning, the US will slap an extra 25% duty on Indian imports.
03:29For many goods, tariffs will soar past 50%.
03:32The trigger, Russian oil deals.
03:53Markets are rattled and the sensex down over 850 points.
03:57With hours to go before the tariff wall rises, exporters are staring at tough days ahead.
04:03Can relief measures and new markets soften the blow?
04:08Bureau Report, India Today.
04:09Before I bring in the experts on the show, let me bring in the politicians.
04:18Sanju Varma, National Spokesperson of the BJP, is also an expert on this subject.
04:24Dr. Shama Mohammed, National Spokesperson of the Congress.
04:27Shama Mohammed, you know, how is the Congress looking at Prime Minister Modi's response and the emphasis on make in India and make for the world?
04:34In this context, because tariffs kick in and Prime Minister certainly is sending that message that India is prepared.
04:41See, Maria, today the question is, why the highest tariffs on India?
04:48Complete failure of foreign policy.
04:50Mr. Modi kept quiet when Trump was saying more than 29 times that the ceasefire was done by him between India and Pakistan,
04:58thinking that the tariffs will go down.
05:00Now look at the implications.
05:02Indonesia was at 32, gone down to 90 by bilateral agreements.
05:08Vietnam got to 20.
05:10Areas surrounding India, Bangladesh, Pakistan, Cambodia, all of them below us.
05:17So what happens, even China has got tariffs less than us.
05:21So what happens is, America is going to get things imported from there.
05:26Now let's look at what has affected us most.
05:29I mean, the phones and the pharmaceuticals are kept out.
05:32It's jewelry, shrimps, which is one of the highest, and garments.
05:36Now garments is 2%.
05:3828% of our garments go there.
05:40A company called Creative in Mumbai has said that they have to sack 6,000 to 7,000 of their employees.
05:47That is closed down to factories, but because it's going to be impossible.
05:51Let's look at the shrimps.
05:5348.8 billion was last year's exports to the United States.
05:58You know, that is 68% of our export.
06:00Now Ecuador has got less of tariffs.
06:03So now America is going to import from Ecuador.
06:06So last year, our exports, I mean, we have a trade surplus with America.
06:11Last year it was around 87 billion.
06:13We are going to go down to 49.6 billion.
06:15So there is complete failure in the foreign policy of Narendra Modi.
06:20One last point.
06:22Trump considered as a very close friend of Mr. Narendra Modi.
06:25Why do you do it?
06:27Where has the foreign policy gone?
06:28And another one, the 25% extra on buying oil from Russia.
06:34Why not on China?
06:35Yes.
06:36All right.
06:37All valid questions being raised here.
06:39Sanju Varma, could India have handled this entire crisis better?
06:44You know, Maria, let me make one thing very clear for the benefit of your audience.
06:52Thank God we have Prime Minister Narendra Modi at the helm of affairs.
06:56They asked us not to buy S-400 in 2018.
07:00Prime Minister Modi ne kisi ki nahi suni.
07:01They said that the Rafale deal is corrupt.
07:05Dismiss it.
07:06Debunk it.
07:07Prime Minister Modi said nothing doing.
07:10They said, you know, stop buying oil from Russia.
07:14And as Jai Shankar said, India buys in a month what European Union buys in a single afternoon.
07:20We didn't listen to them.
07:21Then Trump said, open your agricultural markets to the United States of America.
07:27And Prime Minister Modi again said nothing doing.
07:30Atma Nirmar Bharat is not a slogan or a jumla or a platitude.
07:34For us, it's an abiding work ethic.
07:36And I think let's not, you know, miss the woods for the trees.
07:39Very quickly for your audience, this is what they need to listen to.
07:44The average agri-tariff in South Korea is 57%, 31% in Norway, 28.5% in Switzerland, 28.3% in Thailand, 23.5% in Iceland.
07:58And in European Union, the average tariff is 38.9%.
08:02Japan's average tariff is as high as 61.3% on dairy products.
08:08And it goes up to 258% on cereals.
08:12Now, comparatively speaking, look at India.
08:15India, we have a cap.
08:17No tariff will be more than 110%.
08:19Vis-a-vis EU, Japan or South Korea, where the highest tariff is as high as 389%.
08:25So, my point is this, Maria.
08:27I will just end by saying one thing.
08:29This is very important.
08:30Let's not digress.
08:32Today, let's not forget the biggest and the most, you know,
08:37strongest example of Atman Nirbhar Bharat, which Prime Minister Modi has been talking of,
08:42is in the defence sector, Brahmos.
08:45We exported it to Philippines during Operation Sindhu.
08:49We used Akash, surface-to-air missiles, indigenously built.
08:53We used the Kamikaze Sky Striker drones, indigenously built.
08:58We used Pinaka multi-barrel rocket launcher, indigenously built.
09:03And don't forget that today our defence production is up 300% at more than 1.5 lakh crores.
09:10Yes, Sanjeevama, the question really is that what is evident here is that the United States is punishing India.
09:19And in no uncertain terms, this has been spoken by top diplomats there.
09:25The vice president of US has also said the same.
09:28The question is that could the teams on both the sides, could the strategists, could the diplomats have handled it differently?
09:36How do you mitigate or reverse these tariffs?
09:39A 50% tariff is very huge.
09:44You know, Maria, let me say one thing, you know, which nobody seems to be discussing.
09:48And not even journalists with no offence to you.
09:50In 2022, we inked two very important deals.
09:55A free trade agreement with the ASEAN, which is a group of 11 countries.
10:00And then there was the free trade agreement with Australia.
10:04And more importantly, today our biggest trading partner is the GCC, Gulf Cooperation Council of six major Islamic nations.
10:13Today our annual exports are $821 billion.
10:16Our bilateral trade with the United States of America on an average has been $135 billion or thereabouts.
10:24So my limited point is, today you have the world's fourth largest economy in India.
10:29You have the world's eighth largest tourism economy in India.
10:32Today India is the only economy which has the seventh largest gold reserves, the sixth largest stock market, the fourth largest foreign exchange reserves.
10:40We are the world's second largest steel producing country, the world's third largest solar energy producer, the world's second largest smartphone market, the world's third largest automobil market.
10:51Our stock market capitalization is in the extent of 457 lakhs.
10:56So we have nothing to lose.
10:58What is this, Maria?
11:00Our business class is more than 457 million.
11:04Let her finish her point, I am coming to you.
11:06Shama, please, I mean, one moment.
11:11Shama, this constant thing, one moment.
11:15Both of you, one moment.
11:17I asked her a question.
11:19I asked her the second question.
11:21Sanju, Sanju, Sanju, patience.
11:25I asked her the second question.
11:27She is responding to it because it is the government which has much to explain.
11:32One moment, Shama.
11:33I should not be getting this repeated lessons from you.
11:37No, one moment, ma'am.
11:38I cannot be getting this repeated lessons from you on how to conduct debates.
11:43I asked her a second question.
11:44She is responding.
11:45No.
11:47No, I asked her the second question.
11:49She is responding.
11:50Now I will come to you when our response is over.
11:52Can I finish?
11:53One moment.
11:54Yes, Sanju, please go ahead.
11:5530 seconds.
11:58Maria, my limited point is this very quickly.
12:00Under Prime Minister Modi, this is what India has achieved.
12:03So we have nothing to fear.
12:05The worst, second largest smartphone market, the worst, third largest automobile energy producer.
12:09But, you know, irrespective, irrespective of which party is there in the states,
12:17all states will have to pull in and be a participant in this Atmanir Bharta, Shama Mohammed.
12:24That also means all the opposition rule states.
12:28Because when it is about tariff threat, it affects each and every state of India.
12:32No, no, I need to give me my time.
12:35Now, she went on with data after data, which is all nonsensical, one.
12:39Number two, the most important question, she has not.
12:42You counter her data with her data, no?
12:45Why dismiss her data as nonsensical?
12:48What is your counter data?
12:49No, no, I'm telling you, first and foremost, she has not answered your question.
12:54Why has Trump put on India 50% tariff?
12:58She has not answered.
12:59She went to Rafael.
13:00She went to a new result thing.
13:01We are seventh largest, eighth largest.
13:03That's not what's the answer.
13:05Now, today, if our tariff...
13:06Why do you ratten?
13:07If we are the worst, fourth largest economy.
13:09We are the worst, fourth largest economy.
13:11Shama will speak.
13:12Shama, have Shama on screen.
13:14Why do you ratten?
13:15Shama on screen now.
13:16Yes, Shama, go ahead.
13:17Yeah.
13:17So, suppose today, if Trump had...
13:21If our tariff was around 20%, what would be the debate on...
13:25Whoa, foreign policy success.
13:27We have done it.
13:29We have gone...
13:29Modi has done it.
13:30Today, because we have the highest tariff, we shift the goalposts to Atmanirpur.
13:35I want to know today why we couldn't negotiate...
13:39Do bilateral agreements like Indonesia did, like Pakistan did, like Bangladesh did,
13:45like all the other South Asian, as well as Southeast Asian nations did.
13:49India has the highest tariff.
13:52Why did Trump punish us?
13:54That, there is no answer.
13:55The other thing, when we've got discounted oil, for example, she said, we got it from Russia.
14:00I agree.
14:01And we did not budge.
14:03And that's a very good thing.
14:04We did not budge.
14:05But $65 to $70 a barrel is the price of international oil.
14:09If we've got a discounted price, I want to know today, why am I paying 100 rupees for petrol and 98 for diesel?
14:17Why wasn't that passed on to the citizens?
14:20No.
14:20So, today, what I have to say is that we have a failed foreign policy.
14:24Jai Shankar has been punished.
14:26Everybody, including Modi, who went to campaign in America for Mr. Trump has been punished.
14:33And there is no face saver today because we will see a lot of job losses in India.
14:37We will see it in the shrimp sector.
14:39We will see it in the garment sector.
14:41We will see it in the jewelry sector.
14:42And we don't know what's going to happen in future, whether these tariffs will go into the pharmaceutical industry, which is our biggest, it's a 12% of our GDP.
14:52Whether it will go on to it, we don't know because whether we'll have further punishment.
14:55I want to know when even now, when the 15% tariff was happening, why couldn't we negotiate?
15:02Why didn't we do anything?
15:02Sanju Verma, let me give you the last word.
15:04But the question really is that are we prepared, are we prepared as a nation to deal with this kind of a fallout?
15:13Because the fallout will be felt across sectors.
15:18The ripples will be felt across sectors.
15:21You know, Mariya, I have a small request.
15:23I'm no one to teach you your job.
15:25But I need to be now alone on the screen like she was.
15:28Thank you so much for extending that courtesy to me.
15:31I will end by saying this.
15:35You never put a gun to Prime Minister Narendra Modi's head and tell him do this or do that.
15:40And let me tell the Congress Party which keeps talking about foreign policy failures of Modi government.
15:45When did foreign policy fail?
15:47When Indira Gandhi gave away 93,000 prisoners of war after signing the Shimla agreement,
15:54but could not get back 54 Indian prisoners of war who were left to languish in Pakistan.
15:59Sandhu, you are an economist yourself.
16:02Let's answer the question that is there on everybody's minds.
16:05Okay.
16:06Okay, Mariya, please let me finish, Mariya.
16:08My limited point is this, Mariya.
16:10Today, India is the only economy, mind you, the only economy in the world
16:16which is growing at 6.5% plus.
16:20When inflation came in 10 days back, our inflation is 1.55%.
16:26And guess what?
16:28For the first time, something happened after 18 long years,
16:32which the Congress does not celebrate.
16:34Do you know something?
16:37Standard and post, the rating giant, increased India's, improved India's,
16:43upgraded India's sovereign rating to BBB from BBB minus after a gap of 18 years.
16:51Tell me one thing, Mariya.
16:522022, our GDP growth was 9.7%.
16:552023, it was 7.6%.
16:582023, it was 9.2%, 20.25%.
17:02Give the answer why we have to take a break.
17:05Okay, a number of unanswered questions, certainly.
17:08This debate will be continuing over the next few days and perhaps months as well.
17:13Dr. Shama Mohammed Sanjuwarma, I really appreciate your time on the news track tonight.
17:18And joining me now is Peter Cardillo, Chief Market Economist, Spartan Capital Securities.
17:24We also have William Baiter, Economic Advisor and former Global Chief Economist at Citigroup.
17:31Mr. Baiter, starting with you, from a global economic standpoint,
17:35how significant is the risk that U.S. tariffs pose to India's export-driven growth?
17:44Well, it clearly is a material risk.
17:4750% tariffs on just under, I think, 50 billion worth of Indian good exports
17:55are really going to damage the affected sectors.
18:02Admittedly, not all exports, goods exports, are affected by the latest 25% increase.
18:10And in addition, of course, Indian services exports to the U.S. are not affected either.
18:17But the labor-intensive export sectors for goods are definitely in trouble.
18:26They have to find alternative destinations for these products,
18:30which are no longer competitive, with a 50% tariff imposed on them.
18:34Okay. Mr. Cardillo, would you say that India should wait and watch as India has done so far?
18:41Or what will be your advice to the strategists here in India?
18:48Because they are, of course, calculating the short-term and the long-term consequences of this move.
18:54There is this sense that perhaps these tariffs could also escalate, given the global tensions.
19:01What would you be telling Indian policymakers right now?
19:06Well, let's say up until now, India, I think, has drawn a red line in terms of autonomy
19:16and oil purchases, of course, you know, this is not likely to carry on for much longer
19:28because Trump has certainly imposed tough tariffs on India.
19:37And that means that if the longer it takes for the Indian government to reach an agreement
19:47with Trump, jobs are at risk and the economy is at risk.
19:53So I think, you know, the fact that Trump is playing hardball
19:58and the fact that the prime minister of India is also playing hardball,
20:06that that will probably lead to some sort of an agreement.
20:10I don't think that India can hold out too much longer
20:16without having negative effects on the economy
20:22and, of course, the loss of jobs, which is, you know, a real pearl in terms of the Indian economy.
20:31You know, the government of India's response in countering this global protectionism
20:37certainly is what the prime minister says.
20:39He says that it is about making India make for the world.
20:43So it's about self-reliance that he is now emphasizing on.
20:49Peter?
20:50Well, is that directed to me?
20:54Yes, please. Go ahead.
20:55Yeah.
20:56Yeah, you know, there's no doubt that, you know, we had an about face here.
21:06At the beginning, we saw Prime Minister Modi and Trump.
21:13They were like great friends.
21:17And then all of a sudden there was a turn in action.
21:22And that's because of the fact that India has held out.
21:26So to a certain degree, I think we have to applaud the prime minister of India
21:34for trying to, you know, keep its autonomy and basically telling the United States we can trade with whom we want.
21:46The question is, will he be able to make trade deals with China or with Russia regarding oil?
21:56Or is it going to be too late?
22:00My guess is that, like I said before, some mutual agreement has to be reached.
22:07And it can't go much beyond another month or two without having a real negative effect on the Indian economy.
22:17And I kind of suspect that President Trump knows that.
22:23And at one point or another, he's probably going to make some sort of an effort to get the Indian government back on track with some real solid and significant talks.
22:40Yes, you know, it is about de-escalation from here onwards, but it remains to be seen who makes that first move here.
22:49So, Mr. Baita, how might these trade tensions reshape global supply chains and India's position within them?
22:58Well, clearly, if the current tariffs persist, would lead to a redirection of global supply chains in the U.S.,
23:13and not just to other industrialized countries, but into, you know, other parts of Southeast Asia, Latin America, and all that.
23:24But I think it is possible that the Russian sanctions will be lifted either because, and this is unlikely but not impossible,
23:35there is a peace deal between Russia and Ukraine, or I think it's more likely if India gives in and stops its companies from purchasing Russian crude and other things.
23:53That, I think, that, I think, is the most likely outcome, in which case the tariffs would go down to 25.
23:59But, Mr. Baita, why should India compromise on its autonomy and its sovereign call to decide who they want to purchase oil from?
24:10Well, it's a cost-benefit analysis.
24:13You have to ask yourself, what is the cost of, to the nation, of importing Russian oil?
24:22And also, I would say, through that, supporting the Russian war effort in Ukraine.
24:29I don't think that there is a huge amount of national prestige and Indian national security tied to its continuing its purchase of Russian oil.
24:44It can be given up, I think, at low cost.
24:49All right.
24:50Thank you for joining us, Peter Cardillo and William Baita, on the show tonight.
24:55Of course, the tariffs kick in.
24:57And is there a plan in place?
25:00The indication from the government quarters certainly is that, yes, there has been an emphasis on Atma Nirbharta, or making India make for the world.
25:09That's all from me on this edition of Newstrap.
25:12Thanks so much for watching.
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