India’s Exports to the US: Value Addition Concerns

India's exports to the US are perceived to have low local value addition, which affects the trade balance between the two countries, according to think tank GTRI.

Key Sectors with Low Local Value Addition

• iPhones: Despite a US retail price of $1,000, the export value from India is $500, with India’s actual share being only $30. The remaining value is distributed among component suppliers, Apple, and US retailers.
• Solar Panels, Diamonds, and Petrochemicals: These exports also follow a similar pattern, with India's value addition under 10% of the export value.

Trade Balance and Potential Countermeasures

• India could consider retaliating against US tariffs by: 
  • Raising duties on American goods.
  • Taxing digital firms from the US.
  • Issuing compulsory licenses for patented drugs.
• However, GTRI warns that such measures could escalate into a trade war, potentially harming India.

World Trade Organisation Compliance

The founder of GTRI emphasized that India’s tariffs are consistent with WTO rules. This compliance stems from agreements approved by all member countries, including the US, in 1995.