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Informist, Wednesday, Mar. 12, 2025

By Krity Ambey

NEW DELHI – India's aluminium sector is likely to be more vulnerable than the steel sector to the 25% duty imposed by the US administration on the import of the metals, according to experts. The US has effected a flat 25% tariff on all the steel and aluminium imported into the country. 

The latest measure is likely to impact India's aluminium sector more in the short term on account of the huge share of the US in India's total aluminium exports, Federation of Indian Mineral Industries Additional Secretary General B.K. Bhatia told Informist. The US is the second largest export destination for Indian aluminium, while for iron and steel, it is the sixth largest destination. India had exported aluminium worth $952.69 million to the US in FY24, compared to $475.58 million of iron and steel.

"The tariff measure may inflate prices of the metals in the US and affect demand, leading to some impact on India's exports," Federation of Indian Export Organisations Director General Ajay Sahai said without specifying the magnitude of the impact. India's iron and steel and aluminium exports to the US accounted for 7.4% of the total outbound shipment of the metals of $19.40 billion in 2023-24 (Apr-Mar). 

"During the short-term, it is also likely that China will push its material to India," Bhatia said. Sahai also expressed concerns over dumping from China. "If China is deprived of a $200-billion market in the US, then China will be aggressive in other countries by undercutting the prices or even go for dumping," Sahai said. "They may like to undercut in India as well. We will have to be cautious and watchful."  

Global Trade Research Initiative Founder Ajay Srivastava highlighted that India has a trade deficit with the US in iron and steel. India imported iron and steel worth $1.05 billion from the US in FY24, compared with exports of the metal worth $475.58 million. "So if India retaliates, the US would face a bigger impact in the sector," Srivastava told Informist. New Delhi had retaliated in 2018 after Trump imposed a 25% tariff on steel and 10% on aluminium.

However, there is a meager possibility of a retaliation at this point as India is engaged in negotiations for a trade agreement with the US. In February, Prime Minister Narendra Modi visited Washington and met US President Donald Trump. The two leaders had agreed to negotiate a multi-sectoral bilateral trade agreement and set a target to take their trade to $500 billion by 2030. Both sides have set an aim to conclude the first tranche of the deal by fall.

The trade deal is also expected to shield India from the impact of the reciprocal tariffs. President Trump has announced that the US will impose reciprocal tariffs on several countries, including India, from Apr. 2, based on the duty levied by them on American goods. The reciprocal tariffs on India may entail an average duty hike of at least 5% on Indian goods as US goods face a weighted average tariff of 7.7% in India, while Indian exports to the US face only a 2.8% average tariff currently.

The US is India's top export destination, with a share of 17% in the total merchandise exports. In FY24, India exported goods worth $77.52 billion to the US and had a trade surplus of $35.32 billion.

India has been focusing on improving its trade relations with the US after President Trump's Republican Party won the elections. Trump has expressed displeasure over India's trade policies on several occasions in the last few months. In his latest remark last week, Trump said that New Delhi was willing to cut tariffs massively after his government "exposed" India.  End

US$1 = INR 87.21

Edited by Saji George Titus

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