Impact of tariffs on sales of American brands in India

In the tug-of-war over tariffs that is raging between the United States and India, there is much speculation as to how it will turn out. US President Donald Trump had imposed 25 per cent tariffs on Indian imports and topped it as it were with another 25 per cent – taking it to 50 per cent – penalty tariff for buying oil from Russia. The trade negotiations are still on.

Trump wants to break into the Indian farm sector and sell American agricultural produce in India. India has refused to budge on the issue. It is this refusal that seems to have driven President Trump to impose the additional 25 per cent tariff. On the other hand, Indian Prime Minister Narendra Modi, speaking on the occasion of the centenary celebration of India’s famous agricultural scientist, Dr.M.S.Swaminathan, said that he was ready to pay a personal price but he would not compromise on the interests of the Indian farmer.

Interestingly, Dr.Swaminathan is the driving force behind India’s Green Revolution, which made Indian self-reliant in food grain production. After the acute shortfall in food grain output, which forced India to depend on American wheat imports under PL 480 in the late 1960s, there was serious effort on the part of Indian leadership in politics and in science to make India self-sufficient. Prime Minister Modi is not willing to make any compromise on the farm front.

The London-based news agency, Reuters, has in a report looked at the possibility whether America’s popular brands like Coca-Cola, Pepsi, which sell in huge numbers in India, could be affected if the people were to heed Prime Minister Modi’s appeal to become self-reliant and use Indian products. A pressure group in Modi’s Hindu nationalist group, the Swadeshi Jagran Manch (SJM), has been urging that there should be a boycott of American goods in response to Trump’s punitive tariffs.

The question is whether it will be possible to persuade and convince India’s diverse and huge middle class consumers to give up on their favourite fizz drinks like Coca-Cola and Pepsi, and even on the Starbucks coffee. Said Rajat Gupta in Lucknow, the capital of India’s most populous state, enjoying his coffee at McDonald’s priced at $0.55, “Tariffs are a matter of diplomacy and my McPuff and coffee should not be dragged into it.”

There is however an incipient struggle to create and promote homegrown brands. Manish Chowdhary, co-founder of Wow Skin Science, who has put out a video message on LinkedIn to make ‘Made in India’ a “global obsession, He says, “We have lined up for products, from thousands of miles away, We have proudly spent on brands that we don’t own, while our own fighters fight for attention, in their own country.”

Rahm Shastry, CEO of India’s DriveU, which provides a car driver on call service, asserts in a defiant tone on a LinkedIn message, “India should have its own home-grown Twitter/Google/YouTube/WhatsApp/Facebook...like China has.” There is the rising awareness that India’s should not be too enamoured of the foreign brands.

It will however be unrealistic to predict that millions of Indians will shift to India-made products, and turn them to international brands like the South Koreans have. The Indian consumer class is much too diverse, spread over a vast geography. Building an Indian brand is not an easy thing to do. There are regional barriers, language barriers and cultural barriers.

Secretary of SJM, the protectionist lobby, Ashwani Mahajan, says, “People are now looking at Indian products. It will take some time to fructify. This is a call for nationalism, patriotism.” India’s global tech service companies like the Tata Consultancy Services (TCS) and Infosys have a global footprint, and they earn profits in billions of dollars. But they are no brands like Apple, iPhone.