Synopsis
A recent SBI Research report indicates that the effects of US reciprocal tariffs on India will be minimal due to the country's efforts in diversifying its export strategies and pursuing new trade agreements.Key Takeaways
- The impact of US tariffs on India is expected to be minimal.
- India is diversifying its export portfolio and exploring new markets.
- Projected export decline is around 3-3.5 percent.
- India is negotiating FTAs with several countries to boost trade.
- The digital economy could significantly enhance India's GDP.
New Delhi, March 17 (NationPress) The repercussions of reciprocal tariffs imposed by the US on India are expected to be marginal, as the nation has successfully diversified its export portfolio. By focusing on value addition, exploring new markets, and developing innovative routes connecting Europe to the US via the Middle East, India is strategically reshaping its supply chains, according to a recent report by SBI Research released on Monday.
The anticipated decline in exports is projected to be around 3-3.5 percent, which can be counterbalanced through ambitious export objectives in both the manufacturing and services sectors, the report noted.
India is poised to benefit from the aluminium and steel tariffs recently imposed by the US. Currently, India holds a trade deficit of $13 million for aluminium and $406 million for steel with the US, presenting an opportunity for potential gains.
The US tariffs are set to take effect on April 2, and significant discussions between New Delhi and Washington are ongoing.
Union Commerce Minister Piyush Goyal indicated last week that he engaged in a forward-looking dialogue with US Trade Representative Jamieson Greer regarding a mutually advantageous Bilateral Trade Agreement between India and the US.
Goyal expressed that the strategy would adhere to the principles of ‘India First’, ‘Viksit Bharat’, and the Comprehensive Strategic Partnership, sharing a photo from his meeting with Greer on social media platform X.
Previously, Goyal had met with Greer and US Commerce Secretary Howard Lutnick during his visit to the US. This followed dialogues between US President Donald Trump and PM Narendra Modi regarding the negotiation of the initial phase of a mutually beneficial, multi-sector Bilateral Trade Agreement (BTA) by the autumn of 2025.
SBI Research also highlighted that India is actively pursuing free trade agreements (FTAs) with various partners—both on a bilateral and regional basis—to bolster export-driven domestic manufacturing.
Over the past five years, India has signed 13 FTAs with trading partners like Mauritius, the UAE, and Australia.
The country is presently negotiating FTAs with the UK, Canada, and the EU, focusing on sectors such as services, digital trade, and sustainable development.
Moreover, India and New Zealand have initiated talks for a comprehensive and mutually beneficial FTA.
The anticipated FTA with the UK alone is likely to enhance bilateral trade by $15 billion by 2030. Future FTAs are expected to emphasize the enhancement of digital trade, with forecasts suggesting that the digital economy could contribute $1 trillion to India’s GDP by 2025, according to the report.
The report concludes, “The transition towards regional supply chains and the fallout from geopolitical developments, such as the US tariff conflict, are shaping India's FTA strategies to maintain alignment with global trade trends.”
These FTAs encompass a broad range of topics, including tariff reductions that affect the manufacturing and agricultural sectors, regulations on services trade, digital matters like data localization, intellectual property rights impacting access to pharmaceutical products, and the promotion, facilitation, and protection of investments.
