The 27% tariff hike by US President Donald Trump on Indian goods will have only a limited effect on the Indian economy.
A new SBI Research report says India’s exports to the US account for just 4% of its GDP.
The US raised tariffs more sharply on other Asian countries. It imposed 34% on China, 36% on Thailand, 32% on Indonesia, and 46% on Vietnam. Meanwhile, India faces the lowest hike.
Therefore, the SBI report expects India to gain a comparative advantage.
Over time, this could boost Indian exports in select sectors.
India’s textile exports to the US were around $7 billion between April and December FY25.
The sector may take a hit in the short term due to inflation and reduced demand.
However, India may benefit in the long run. As tariffs hit rivals like China and Vietnam harder, India could expand its market share.
The report warns of a bigger blow to engineering goods.
Disruptions in supply chains and falling export income could hurt this sector significantly.
India is better placed in electronics.
China now faces US tariffs ranging from 54% to 79%. In comparison, Indian exporters have more room to grow.
India exported $9 billion worth of electronics to the US in April–December FY25. This accounted for 15% of India’s total US exports.
Gems & Jewellery Will See Strong Impact
The gems and jewellery sector may feel the sharpest impact.
The US may raise tariffs to 20% on loose diamonds (currently zero) and 5.5–7% on gold jewellery.
India exported $10 billion worth of these items to the US last year. This made up 30.4% of its total $32 billion exports in the sector.
On the other hand, agricultural exports could remain stable.
Competing nations now face higher tariffs, giving India a relative edge.
India exported $1.5 billion worth of seafood to the US in the April–December FY25. This made up 3% of total exports to the US.
The report says demand won’t drop immediately.
Even though India’s exports to the US have dipped since FY23, they still make up 17–18% of total exports.
The top 15 export items contributed 63% of the total.
In conclusion, the SBI report says global economic slowdown and financial instability pose a greater risk to India than the tariff hike alone.
Also Read: India’s Forex Reserves Surge To $665.4 Billion, Rupee Strengthens As Trade Deficit Narrows
To read more such news, download Bharat Express news apps
