India trade boost: US exempts select farm goods from reciprocal tariffs; GTRI sees marginal gains

Core Insights - A White House Executive Order on November 12 exempted several agricultural products from reciprocal tariffs, reducing them to standard MFN duties effective November 13 [2][5] - India's immediate export gains from this exemption are expected to be limited due to its small share in the U.S. import market for these products, amounting to only $548 million out of a $50.6 billion import basket [2][4] Group 1: Tariff Exemption Details - The exempted products include coffee, tea, tropical fruits, fruit juices, cocoa, spices, bananas, tomatoes, beef, and some fertilizers [2][5] - The U.S. imports of these products are substantial, with coffee at $9 billion, tropical fruits and avocados at $6.1 billion, and fresh fruits at $6.3 billion [5][6] Group 2: India's Export Position - India's exports in the newly liberalized tariff lines are dominated by high-value spices and tea, with specific figures including $181 million in pepper and capsicum preparations, $84 million in ginger-turmeric-curry spices, and $68 million in tea [2][4] - India has negligible exports in larger tariff-exempt categories such as tomatoes, citrus fruits, melons, and bananas, with zero exports in tomatoes and less than $0.5 million in bananas [3][4] Group 3: Competitive Landscape - The exemption reflects the U.S. need to maintain low duties on items not produced domestically in sufficient quantities or reliant on climate conditions that cannot be replicated in the U.S. [3][4] - While the policy shift may provide India with a marginal competitive advantage in spices and niche horticulture, the majority of benefits are likely to accrue to Latin American, African, and ASEAN exporters who already dominate U.S. imports in these categories [3][4]