News Brief
Arjun Brij
Feb 17, 2025, 02:24 PM | Updated 02:23 PM IST
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The impact of potential US tariff reciprocity on Indian exports is likely to be limited, despite concerns over rising trade restrictions, according to a recent State Bank of India (SBI) report.
The study suggests that even if Washington imposes tariffs ranging from 15 to 20 per cent, the decline in Indian exports to the US is estimated to be a modest 3 to 3.5 per cent, reported ANI.
The report emphasised, “Our estimates show overall incremental tariff levels even at 15-20 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.”
Trade analysts believe that India can offset any adverse effects through strategic export diversification, increased value addition, and the exploration of new trade corridors.
The US remains India's largest export destination, accounting for 17.7 per cent of total outbound shipments in the financial year 2023-24.
However, India has been actively working to reduce its reliance on a single market, strengthening its trade presence in Europe, the Middle East, and other key regions.
While US tariffs on Indian goods have fluctuated over recent years, India’s tariff policies have been more dynamic.
The report highlighted that the US tariff rate on Indian imports rose from 2.72 per cent in 2018 to 3.91 per cent in 2021, before slightly declining to 3.83 per cent in 2022.
In contrast, India's tariffs on US goods saw a sharper increase from 11.59 per cent in 2018 to 15.30 per cent in 2022, reflecting a more assertive trade approach aimed at balancing trade relations and safeguarding domestic industries.
A key element of India’s evolving export strategy is its shift from raw material exports to finished goods and high-value products.
By focusing on value addition, India is not only boosting its export earnings but also ensuring Indian products remain competitive globally, mitigating the effects of potential tariff hikes.
Furthermore, India is actively developing alternative trade routes connecting Europe, the Middle East, and the US, which are expected to reduce logistical costs and enhance efficiency.
Overall, while the US may introduce higher tariffs, India’s proactive trade strategies, economic diversification, and infrastructural enhancements are expected to sustain export growth, ensuring long-term trade stability.
Arjun Brij is an Editorial Associate at Swarajya. He tweets at @arjun_brij