To deal with tariffs, focus on becoming more competitive, says CEA

Chief Economic Advisor (CEA) V. Anantha Nageswaran on Tuesday said industry has to invest and focus on becoming more competitive.

He was responding to a question on addressing export gaps in the light of the recent tariffs imposed by the U.S.

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Speaking atDelhi University’s P.G.D.A.V College, the CEA elaborated, “If you are competitive, your marginisbetter [then] you would be able to absorb some of the cost [by] yourself.”

Mr. Nageswaranspecificallypointed to how the domestic pharmaceuticals industry coped with theTrade-Related Aspects of Intellectual Property Rights (TRIPS)agreement of 1995-96 by boosting investments in research and development (R&D) thereby becoming competitive.Forcontext,whenIndia joined the WTO in 1995 and became a party to TRIPS pact, thepatenting regime then did notpromptenthusiasm among the generic drug industry back homeover concerns of affordability.

Diversification, continuing talks

Dr. Nageswaran observed there has been a “near-term impact” on India’s export growth, particularly with U.S., because of the tariff regime.The CEA held theongoing negotiations with Washington and diversificationof export markets as potential ways to address the evolving tariff regime. With respect to negotiations with the U.S., the CEA said, “I am hoping it will result in something favourable[for India] very quickly.”

Stressingupon the imperative for diversification, hesaid the Indian government has struck “enough” trade agreements with other regions, such as the U.K. and Australia, and isalso looking to negotiate more such agreements with European Union and the Gulf countries. He added the government was alsoaccordingshort-term relief measuresfor exporterstohelpdeal with cash-flow challenges.

“These are not likely to give you immediate answers next day or next week,” he said, adding, “We need to use this opportunity to do some of these things so the next time we are not impacted as much as we are this time.”

No thaw in sight

New Delhi’s purchase of Russian oil has been the biggest point of contention for a favourable trade deal with the U.S.Earlier this year, Washington placed a 50% tariff rate on India, inclusive of 25% penalty, forpurchasingRussian oil, whilst seeking to address Moscow’s actions in Ukraine.India has been steadfast inmaintainingthe discounted Russian oil being imperative for energy security.