U.S. Scrutinizes Authenticity of Indian-Made Goods Amid Trade Shifts
Special Feature : Nitin Sindhu VY
April 24, 2020
The Changing Global Trade Landscape
As the U.S. imposes steep tariffs of up to 245% on Chinese imports, Indian exporters find themselves in a favorable position. With lower duties on Indian goods, there is a significant opportunity to capture a larger share of the American market. However, Indian products remain 15-20% more expensive than their Chinese counterparts, raising concerns about competitiveness.
The Core Issue: Proving True Indian Origin
The U.S. is tightening scrutiny to ensure that products labeled "Made in India" are genuinely manufactured in India, not just assembled from foreign components. This means Indian exporters must demonstrate real value addition—such as manufacturing key components, altering product designs, or incorporating Indian-made materials—rather than merely repackaging imported parts.
Understanding the Rules of Origin
To qualify for preferential tariffs, Indian exports must meet strict origin criteria:
1. Wholly Obtained Rule
- Products entirely sourced and manufactured in India (e.g., Indian cotton, tea, or spices) automatically qualify.
2. Substantial Transformation Rule
- If imported materials undergo a significant manufacturing change in India, the final product can be considered Indian.
- Example: Turning imported steel into machinery or processing raw cotton into finished textiles.
3. No "Minimal Processing" Loopholes
- Simple tasks like cutting, packaging, or basic assembly of imported goods do not qualify as "Made in India."
- Example: Importing Chinese fabric and stitching it into garments in India may not meet the criteria unless substantial value is added.
What Indian Exporters Need to Do
To avoid being hit with Chinese-level tariffs, businesses must:
- Audit their supply chains to identify reliance on foreign components.
- Increase local value addition through R&D, manufacturing core parts, or redesigning products.
- Maintain detailed documentation proving Indian origin to satisfy U.S. customs.
The Bigger Picture: A Test for 'Make in India'
This move by the U.S. serves as a litmus test for India’s manufacturing capabilities. While the country has a chance to boost exports, success depends on moving beyond ow-value assembly to true innovation and production.
Conclusion: Opportunity or Obstacle?
The U.S. market presents a golden opportunity, but only for exporters who genuinely embrace "Make in India." Those who rely on imported goods with minimal changes risk losing their competitive edge. For India to become a global manufacturing hub, deepening domestic production is no longer optional—it’s essential.
Key Takeaways:
✅ U.S. tariffs favor India—but only for authentic Indian-made goods.
✅ Simple assembly won’t cut it; real manufacturing is required.
✅ Exporters must prove value addition or face Chinese-level duties.
✅ A push for India to strengthen its manufacturing ecosystem.
