New Delhi [India], July 14 : India has a significant opportunity to increase its chemical exports to the United States if it manages to negotiate for less than 25 per cent tariffs, according to a recent report by the State Bank of India (SBI).
The report noted that by capturing a part of the market share currently held by China and Singapore, India can increase its share in chemical exports to US.
The report highlighted that if India is able to capture just 2 per cent of the chemical export share from these two countries, it can potentially add 0.2 per cent to its Gross Domestic Product (GDP).
SBI stated "India can capture China and Singapore's share in chemical exports to US".
The report pointed out that among the top five imports by the USA, India has a revealed comparative advantage (RCA) only in the chemicals sector.
However, its share in this category remains lower compared to other Asian countries like China and Singapore. At present, China and Singapore have a larger share of chemical exports to the US than India.
With China now facing higher tariffs on exports to the US, the report notes that this could open a window of opportunity for India to step in and increase its exports in chemicals, including pharmaceutical products.
The report further stated that if India is able to bring down the applicable tariff on its chemical exports to below 25 per cent, the level currently applicable to Singapore, it can become more competitive and seize some of the existing market share held by Singapore and China.
Additionally, the SBI report noted that India can also gain from other countries such as Japan, Malaysia, and South Korea, which now face higher tariffs than India.
If India captures even a 1 per cent share of the US chemical import market from these three countries, it could result in an additional 0.1 per cent increase in India's GDP.
In total, the report suggested that India has the potential to add 0.3 per cent to its GDP if it strategically captures a 2 per cent share from China and Singapore and 1 per cent from Japan, Malaysia, and South Korea in the US chemicals import market.
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