New Delhi, Feb 17 US trade tariff reciprocity may turn out be more of white noise and overall bilateral negotiations provide a collateral benefit to India, through fostering a conducive environment of cooperative dynamism across defence, energy security, innovations, technology, critical minerals, maritime security, investments and higher education, a special SBI Research report said on Monday.
The largest and most vibrant democracy stands tall as a natural allay to US “in the Indian Ocean from a strategic, as also economical perspective”, according to the report from the State Bank of India’s Economic Research Department, titled “Collateral benefits: IND-US trade set to transcend new boundaries”.
“Our estimates show overall incremental tariff levels even at 15 per cent-20 per cent imposed by USA would still limit the impact on exports to US only in the range of 3-3.5 per cent, which again should be negated through higher export goals,” said the SBI report.
India has diversified its exports kitty, pitched value addition, exploring alternate areas and works on new routes that transcend from Europe to USA via the Middle-East, redrawing new supply chain algorithms that foster strategic inclusivity, it emphasised.
Both India and the US have adjusted their tariff structures over the years, reflecting evolving trade policies and economic priorities.
While the US tariffs on Indian exports have remained relatively stable, India's tariff adjustments appear to be more dynamic.
“The US tariff rate on Indian goods increased from 2.72 per cent in 2018 to 3.91 per cent in 2021, before slightly declining to 3.83 per cent in 2022. India's tariffs on US imports have risen from 11.59 per cent in 2018 to 15.30 per cent in 2022,” the report showed.
The US is India’s top export destination, accounting for 17.7 per cent share of total exports in FY24.
“We have also estimated the likely fall in Indian exports if USA imposes a retaliatory tariff of 15 per cent (3x the present aggregate) on India. This helps in capturing sensitivity of exports to tariff fluctuations,” said the SBI report.
Both nations plan to sign this year a new ten-year ‘Framework for the US-India Major Defence Partnership in the 21st Century’. Both countries aim to more than double the total bilateral trade to $500 billion by 2030.
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