A recent report by the State Bank of India has found that the impact of US tariff reciprocity on Indian exports will be minimal, with only a 3-3.5% decline in exports to the US, even if the US imposes higher tariffs ranging from 15-20%. This is due to India’s strategy of export diversification, value addition, and exploration of new trade routes. The report notes that India’s export strategy is evolving to reduce dependence on a single market, with growing trade ties in Europe, the Middle East, and other regions.
The report also highlights the dynamic nature of India’s tariff policies, which have increased from 11.59% in 2018 to 15.30% in 2022, in contrast to the relatively stable US tariffs on Indian goods. This shift reflects India’s more assertive trade policy aimed at balancing trade relations and protecting domestic industries. India is focusing on adding value to its exports, shifting from raw materials to finished goods and high-value products, which enhances export earnings and reduces the impact of tariff hikes.
The report suggests that India is also working on alternative trade routes, connecting Europe, the Middle East, and the US, reducing logistical costs and improving efficiency. This restructured supply chain approach is expected to strengthen India’s position in international trade despite global uncertainties. Overall, the report concludes that while US tariffs may impact Indian exports, India’s proactive trade policies, export diversification, and supply chain realignment will mitigate the impact, ensuring steady export growth in the long run.