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India's export economy is heading towards a critical point, as exporters warn that by December, the ongoing trade dispute with the United States could begin inflicting serious economic damage.
In an exclusive telephonic interview with ANI, Ashok Gulati, an agriculture economist and Professor at the Indian Council for Research on International Economic Relations (ICRIER), has raised concerns that unless the punitive tariffs imposed by the US are withdrawn soon, India may start losing access to one of its most valuable markets, with job losses in key sectors likely to follow. "Most exporters told us they front-loaded their consignments to manage the impact of tariffs. They can bear this situation only till December. If the dispute isn't resolved by then, layoffs will begin in the textile and apparel sector, gems and jewellery, as well as in shrimp exports," Gulati told ANI. These three sectors alone account for millions of jobs and contribute significantly to India's merchandise export earnings, with the US being a top destination, he said. Gulati emphasised that India must be pragmatic in its trade strategy. "While sovereignty is not tradable, India needs to be smart in trade negotiations, which always involve some give and take," he noted, adding that removing punitive tariffs should be an immediate priority if damage is to be avoided. A prolonged deadlock, he warned, will push companies to shift their focus to alternative markets or scale down operations entirely. He also pointed to structural issues on India's side that are limiting its leverage. Despite India being described as an open economy, it still maintains high trade-weighted average tariffs in agriculture, currently at 64 per cent. In contrast, the United States stands at 4 per cent, the European Union at 9 per cent, and China at 14 per cent. Gulati said this imbalance "Requires rationalisation and fast reduction" to help India integrate more effectively into global trade systems and boost its credibility as a negotiating partner. Gulati expressed hope that negotiations between the two countries could be steered toward a balanced resolution. "Trade benefits both sides if it is negotiated with mutual respect and understanding. Hope we can resolve our differences and come to a trade deal soon. There are always compromises on both sides in a trade negotiation. Give and take is the fundamental principle," he said. India and the US have been engaged in a tariff battle since early this year, following disagreements over agricultural market access, digital taxation policies, and standards certification. While both countries have expressed a desire to maintain strong bilateral ties, a breakthrough has remained elusive. With just a few months left before the year-end deadline exporters are warning about, India's policymakers face mounting pressure to act decisively. The cost of inaction could be steep, both in terms of lost export revenue and the livelihoods of millions who depend on these sectors. (ANI)
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