(Global Economy) India will cut import tariff on pecans by 70 percent says Senator Jon Ossoff

India has agreed to reduce the import tariff on pecans by 70 per cent, said an influential American Senator, who has been campaigning on it for the last one year.

 

Senator Jon Ossoff, who represents Georgia in the US Senate and met seven times with India’s Ambassador to the US Taranjit Singh Sandhu over the last year, on Wednesday said that the reduction in tariff on pecans would help the farmers in his constituency.

 

“Today I can announce that after a year of painstaking diplomacy, the Indian government will cut that tariff by 70 per cent. This is a huge win for Georgia pecan farmers, and it wouldn’t be possible without them,” Ossoff said.

 

Ossoff said India’s high pecan tariffs have prevented Georgia pecan exports to this market of more than one billion consumers.

 

He thanked US Trade Representative Ambassador Katherine Tai for her steadfast support, Sandhu for his constructive engagement, Senator Warnock for his teamwork, and Georgia’s farmers for their perseverance to secure this victory.

 

Ossoff met last year with Deputy US Trade Representative Ambassador Sarah Bianchi, who agreed at his urging to put reducing India’s high pecan tariffs at the top of the US - India trade agenda.

 

In August 2022, Ossoff personally led an economic delegation to India to meet with key business and government leaders and continue urging for a reduction in tariffs.

 

Last month, he brought US Trade Representative Ambassador Tai and the US Chief Agriculture Negotiator Doug McKalip to Georgia to meet with farmers and representatives of the main agricultural industries in the state, where they briefed leaders on efforts to find a reduction in India’s high tariff.

The global economy is a complex system in which actions taken by one nation have repercussions in other countries. The world economy would be significantly impacted by India's decision to reduce the import duty on pecans by 70%, as stated by Senator Jon Ossoff. With a $3.1 trillion GDP, India is the seventh-largest economy in the world. India is also the world's largest consumer of nuts, with a projected 1.5 million tonnes of consumption in 2021. The demand for pecans in India has increased over the years, and the country imports the majority of its pecans from the United States. India was one of the biggest importers of pecans in 2020, bringing in $280 million worth of pecans from the US. The article examines concepts of international trade, the global market, and tariffs under the unit of the global economy, along with the relation of supply and demand. The concept of tariff is the focal area of study that comprises this article. According to the news, India has announced a 70% drop in the import tax for pecans. A nation may apply tariffs as taxes or charges on imported goods to defend its industries generate money, or both. Imported goods become more expensive when a government places a tax on them, which may reduce their ability to compete with domestically produced items. In the case of pecans, India's decrease in import duties is anticipated to lower the cost of importing pecans from the US, which may lead to a rise in demand for American pecans in India. By making their goods more competitive with those of Indian domestic pecan growers, the tariff decrease may also help American pecan farmers.

 

The key concept addressed in relation to this article is well-being; this can be deduced as the issue addresses the concerns of Georgian farmers. It is conceivable to speculate on how this policy move may affect Georgian farmers' well-being. The drop in pecan import taxes is projected to stimulate demand for imported pecans in India, opening up new market prospects for Georgian producers. As quoted by the representative of Georgia senator Jon Ossoff, “This is a huge win for Georgia pecan farmers, and it wouldn’t be possible without them”, indicating a boost in their well-being by increasing their income and raising their standard of living. Moreover, the lowering in pecan import taxes may have significant consequences for the Indian economy as a whole. If tariff reductions raise demand for imported pecans, this might benefit the Indian economy by enhancing international commerce and generating new market possibilities for American pecan farmers. Yet, if domestic manufacturers suffer, this might have a detrimental influence on the general health of the Indian economy.

The graph above depicts the impact of the 70% tariff reduction on nut imports in India. As demonstrated by the graph, equilibrium is met at quantity Q_e and price P_e. With the imposition of the first tariff, the quantity demanded pecans at price P₁ is Q₂ however the quantity supplied is only Q₁ indicating unaffordability. However, as there is a reduction in the tariff by 70%, the quantity demanded Q₄ at price P₂ is now being supplied with quantity Q₁, showcasing a reduction in price that boosts trade liberation, encourages specialization, and lowers consumer prices.

 

Tariffs are a type of trade policy that governments use to prohibit or stimulate the import or export of specific commodities or services. In this situation, the Indian government has agreed to lower pecan import duties by 70%, which is expected to boost the number of pecans imported into India. The programme aims to reduce the cost of imported pecans for Indian customers, which might benefit both Indian consumers and overseas pecan producers. The short-run effects that precede this policy include increases in imports, lower prices and higher competition. The long-run implications include domestic production, an effect on trade relations and an improvement in consumer welfare. Alternatives include providing subsidies to boost domestic production, imposing quotas on the quantity of imports and establishing bilateral agreements. In the short run trade wars can occur as competition may rise due to the sudden reduction in the tariff. Tariffs are a sort of trade barrier that imposes levies on imported products. This cut is projected to boost the amount of nuts imported into India, increasing demand for American pecans.

 

In conclusion, India's decision to decrease the import tax on pecans by 70% is a favourable development for international pecan producers since it is expected to stimulate demand and trade for pecans in India. Tariff reductions may be studied using the trade barrier concept, as they can impede international commerce. India is expanding its market to additional pecan imports by decreasing the trade barrier for pecans, which is beneficial for both economic actors.

“Effect of tariffs.” Economics Help, https://www.economicshelp.org/blog/glossary/tariffs/. Accessed 6 April 2023.

 

“India Will Cut Import Tariff On Pecans By 70%; Says Senator Jon Ossoff.” Outlook India, 2 February 2023,

 

https://www.outlookindia.com/business/india-will-cut-import-tariff-on-pecans-by-70-says-%20senator-jon-ossoff-news-258842.%20Accessed%206%20April%202023.

 

“Tariff | Definition, Types, Examples, & Facts | Britannica.” Encyclopedia Britannica, https://www.britannica.com/topic/tariff. Accessed 6 April 2023.