Impact of US Tariffs on India Minimal, SBI Report Reveals, Thanks to Diversified Export Strategies
According to a new report by SBI Research, the impact of upcoming US reciprocal tariffs on India’s exports will be minimal, thanks to the country’s diversified export strategies, value-added products, and new trade routes.
New Delhi: According to a new report by SBI Research, the impact of upcoming US reciprocal tariffs on India’s exports will be minimal, thanks to the country’s diversified export strategies, value-added products, and new trade routes. The report highlights that India is proactively working on new supply chain algorithms, which will help mitigate the effects of US tariffs.
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Minimal Decline in Exports Expected
The report forecasts a potential decline in India’s exports due to the tariffs in the range of 3-3.5%. However, this reduction is expected to be counterbalanced by the country’s higher export goals across both the manufacturing and services sectors. The diversified export portfolio will help India continue to maintain its strong trade presence despite global challenges.
India Set to Benefit from US Tariffs on Aluminium and Steel
In addition to this, India stands to gain from the recent US tariffs on aluminium and steel. As India currently faces a trade deficit with the US in these sectors — $13 million for aluminium and $406 million for steel — it has the opportunity to leverage these tariffs to balance its trade position.
Bilateral Talks Between India and the US
The US reciprocal tariffs are set to take effect on April 2, 2025. In response, intense bilateral discussions are underway between New Delhi and Washington to address the potential challenges. Union Commerce Minister Piyush Goyal recently met with US Trade Representative Jamieson Greer to discuss a mutually beneficial Bilateral Trade Agreement (BTA) between India and the US.
India Strengthens Global Trade Ties Through Free Trade Agreements (FTAs)
SBI Research also points out that India has been actively pursuing Free Trade Agreements (FTAs) with a variety of global partners to boost its export-driven domestic manufacturing. Over the past five years, India has signed 13 FTAs with countries like Mauritius, the UAE, and Australia. Additionally, India is negotiating FTAs with the UK, Canada, and the EU, focusing on key areas such as services, digital trade, and sustainable development.
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The FTA with the UK alone is expected to increase bilateral trade by $15 billion by 2030. India is also in discussions with New Zealand to launch a comprehensive and mutually beneficial FTA.
Future Focus on Digital Trade and Global Supply Chain Shifts
One of the significant takeaways from the report is the shift toward regional supply chains, influenced by geopolitical factors like the US tariff war. These changes are prompting India to realign its FTA strategies in response to global trade dynamics. Future FTAs are expected to focus heavily on enhancing digital trade, which is projected to contribute up to $1 trillion to India’s GDP by 2025.
Key Areas of Focus for Future FTAs
The upcoming FTAs are expected to cover a wide array of important topics, including:
- Tariff reductions affecting manufacturing and agriculture sectors.
- Rules on services trade, including regulations on digital issues like data localisation.
- Intellectual property rights that could impact the accessibility of pharmaceutical drugs.
- Investment promotion, facilitation, and protection to encourage foreign investments.
India’s proactive strategies, including diversifying export markets, signing FTAs, and exploring new trade routes, are expected to buffer the country against the impact of US tariffs. The growing emphasis on digital trade and regional supply chains will also help position India as a resilient global trade partner in the future.
