New Delhi, March 17 The impact of US trade reciprocal tariffs on India will be minimal as the country has diversified its exports kitty, pitched value addition, exploring alternate areas and works on new routes that transcend from Europe to the US via the Middle East, redrawing new supply chain algorithms, a new SBI Research report said on Monday.
The decline in the exports is expected to be in the range of 3-3.5 per cent, which again should be negated through higher export goals across both manufacturing and services fronts, the report mentioned.
India will also be able to take advantage of the aluminium and steel tariffs imposed by the US last week. India has a trade deficit for aluminium ($13 million) and steel ($406 million) trade with the US where it can potentially take advantage.
The US reciprocal tariffs are expected to come into effect on April 2, and intense bilateral talks between New Delhi and Washington are currently on.
Union Commerce Minister Piyush Goyal said last week that he "had a forward-looking discussion with US Trade Representative Jamieson Greer on a mutually beneficial Bilateral Trade Agreement" between India and the US.
"Our approach will be guided by ‘India First', ‘Viksit Bharat’ and our Comprehensive Strategic Partnership," Goyal posted on X, along with a photo of his meeting with Greer.
Goyal had previously met Greer and US Commerce Secretary Howard Lutnick during his visit to the US. This followed US President Donald Trump and PM Narendra Modi's talks on negotiating the first tranche of a mutually beneficial, multi-sector Bilateral Trade Agreement (BTA) by the fall of 2025.
According to SBI Research, India has also been talking about free trade agreements (FTAs) with several partners – both bilateral and regional – in a bid to boost export-oriented domestic manufacturing.
India has signed 13 FTAs in the last five years with its trading partners like Mauritius, the UAE, Australia, etc.
The country is also negotiating FTAs with the UK, Canada, and the EU, targeting sectors like services, digital trade, and sustainable development.
India and New Zealand have also announced the launch of negotiations for a comprehensive and mutually beneficial FTA.
The FTA with the UK alone is expected to increase bilateral trade by $15 billion by 2030. Future FTAs will likely focus on enhancing digital trade, with projections indicating that the digital economy could add $1 trillion to India's GDP by 2025, according to the report.
“The shift towards regional supply chains and the impact of geopolitical changes, such as the US tariff war, are influencing India's FTA strategies to ensure alignment with global trade dynamics,” the report added.
These FTAs cover a wide array of topics, such as tariff reduction impacting the entire manufacturing and agricultural sectors; rules on services trade; digital issues such as data localisation; intellectual property rights that may have an impact on the accessibility of pharmaceutical drugs; and investment promotion, facilitation, and protection.
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