Mounting Concerns from Indian ExportersThe Federation of Indian Export Organisations has voiced its apprehensions regarding the United States’ decision to significantly raise tariffs on steel and aluminium imports. The move is expected to adversely affect Indian metal exporters, who have been steadily growing their presence in the American market. FIEO officials called on the Indian government to swiftly engage with Washington to seek relief or exemptions for Indian producers.

Details of the US Tariff Policy ShiftThe United States announced plans to increase import duties on various steel and aluminium products to 50% as part of its broader strategy to protect domestic manufacturing. The move, which doubles the existing tariffs, has stirred unease in several exporting nations, including India. The Biden administration cited national security and economic resilience as the rationale behind the measure, invoking Section 232 of the Trade Expansion Act.

India’s Export Exposure to the US MarketIndia exported steel and aluminium goods worth approximately $2.6 billion to the US in 2023. With the new tariffs in place, Indian exporters could see a sharp decline in their market share due to price disadvantages. The US is one of the largest markets for India’s semi-finished and finished metal products. The FIEO fears that such measures could trigger trade diversion, favouring countries with lower or no tariffs under free trade agreements with the US.

Calls for Bilateral EngagementFIEO has urged the Ministry of Commerce and Industry to initiate formal talks with US trade representatives. The organization stressed the importance of highlighting India’s role as a reliable supplier and a strategic economic partner. Diplomatic efforts may seek either a relaxation of tariff levels or a bilateral exemption similar to those negotiated by other US allies. India had earlier received limited relief during previous trade tensions under the Trump administration.

Impact on Indian ManufacturersSeveral large Indian companies including JSW Steel, Tata Steel, and Hindalco Industries could face serious export losses. These firms had ramped up their US-bound shipments following the recovery in global demand post-COVID. Now, with elevated tariff barriers, many may be forced to either absorb the cost or look for alternative markets, such as the EU, Southeast Asia, or Africa, to sustain volume growth. Smaller manufacturers could be especially vulnerable due to thinner margins.

Ripple Effects Across Supply ChainsExperts believe the tariff hike will not only affect direct exporters but also related supply chain sectors. Industries that provide logistics, fabrication, machinery, and packaging services to metal exporters may experience a slowdown. Exporters will also face delays and additional compliance requirements, leading to a cascading effect on delivery schedules and international contracts. This may affect India’s overall export performance for the fiscal year.

Preparing for Market DiversificationTo counter the possible downturn, FIEO is encouraging Indian exporters to intensify efforts in market diversification. Strategies under review include tapping into Latin America, Africa, and Oceania, as well as forming regional supply alliances. The Indian government’s Production Linked Incentive scheme and incentives for infrastructure exports may provide temporary cushions. There is also renewed emphasis on promoting value-added products to offset the impact of costlier tariffs.

Strategic Response from PolicymakersThe Indian government is closely monitoring the situation and has reportedly started internal consultations with trade and industry bodies. A response framework is being drafted, which may include requesting WTO consultations, reviewing India’s own tariff schedule, and examining the possibility of targeted support for affected sectors. While retaliation is unlikely, experts suggest that India will rely on diplomatic routes and multilateral platforms to address the issue constructively.

Key Takeaways:

• FIEO warned that new US tariffs on steel and aluminium could significantly impact India’s $2.6 billion exports to the US.

• Indian exporters like JSW Steel and Hindalco may be forced to explore alternative markets to avoid losses.

• The Indian government is considering trade talks and WTO consultation to protect local industry interests.