New Delhi, April 3 The PHD Chamber of Commerce and Industry (PHDCCI) on Thursday said that owing to India’s price competitiveness and supportive government policies, it expects GDP to see only a marginal 0.1 per cent impact amid the recently announced US reciprocal tariffs.
Strong domestic manufacturing, continued government handholding by strategic policy measures including production-linked incentive (PLI) schemes, ‘Make in India’ and ‘Atmanirbhar Bharat’, among others, will support India’s growth resilience, PHDCCI President Hemant Jain said.
The industry chamber expected continuing collaboration with the US through a well-negotiated bilateral trade agreement (BTA) that is likely to come into effect in fall 2025.
"India’s robust industrial competitiveness will balance the impact of US tariff announcements and GDP will see only a 0.1 per cent impact in the short term," said Jain, adding that in the medium term, as the policy takes full effect, this shortfall will be negated.
The transition to strengthening domestic consumption will easily absorb the tariff impact. India’s robust demand augurs well for sectors such as electronics, renewable energy, and pharmaceuticals, among others.
India is a major consumer market with diversified supply and value chains with emerging trade partners that includes the Middle East, South Africa, and Latin America, as well as Asian nations. The demand for Indian products has increased in recent years due to price competitiveness and improved quality.
According to a Morgan Stanley report on Thursday, on monetary policy, "we expect the RBI to cut rates by 25bps and also anticipate that on the back of an uncertain external demand environment, the RBI will change its stance to accommodative in the policy review on April 9".
In case of pronounced downside risks to growth, "we expect policymakers to pause fiscal consolidation and increase capex spending to support domestic demand", said the global brokerage.
The executive order issued by US President Donald Trump has imposed an additional duty of 27 per cent on Indian goods entering the US and the Ministry of Commerce and Industry is carefully examining the implications of the order.
Keeping in view the vision of ‘Viksit Bharat’, the Commerce Department is engaged with all stakeholders, including Indian industry and exporters, taking feedback of their assessment of the tariffs and assessing the situation.
The Department is also studying the opportunities that may arise due to this new development in the US trade policy, according to the Ministry.
The Trade Promotion Council of India (TPCI) Chairman, Mohit Singla, said that they do not see much impact on most Indian products.
“For most of the competing countries, the tariff has been kept very high, which keeps India better off than many other emerging economies. For example, US tariffs on all Chinese products are now as high as 65 per cent," he noted.
In the agriculture sector, there might be a few market diversification, such as for shrimp, where some business might go to Venezuela or tea to Sri Lanka and Kenya.
"In fact, in the long run, the non-tariff barriers (NTBs) will see more rationalization and Indian companies will be pushed to better efficiencies and quality products," said Singla.
Crisil Ratings' Senior Director Anuj Sethi said the US administration has exempted pharmaceuticals from reciprocal tariffs, given its focus on enhancing availability of affordable medical care of the US citizens.
India exported $8 billion of pharma products to the US in fiscal 2024, its largest export destination, and supplies 40 per cent of generics consumed in the US, and this move by the US Administration will help sustain exports.
"India has more than 650 manufacturing facilities approved by the US Food and Drug Administration (USFDA), the second-highest number outside the US. They account for a quarter of all such certified facilities outside the US," Sethi said.
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