India's Diversified Exports To Cushion Impact Of US Tariffs: SBI

(MENAFN- KNN India) New Delhi, Mar 17 (KNN) India is expected to face minimal impact from the recent reciprocal tariffs imposed by the United States, according to a report by SBI Research released on Monday.

The report highlights that India's diversified export base, increased value addition, and exploration of alternative trade routes through the Middle East to the US and Europe have strengthened its position in the global supply chain.

The anticipated decline in exports due to the US tariffs is estimated to be between 3 per cent and 3.5 per cent. However, this is expected to be offset by higher export targets in both manufacturing and services, the report stated.

India may also benefit from the US tariffs on aluminium and steel imposed last week. India currently has a trade deficit with the US of USD 13 million in aluminium and USD 406 million in steel, presenting an opportunity to increase exports in these sectors.

The US tariffs are scheduled to take effect on April 2, with ongoing bilateral discussions between New Delhi and Washington aimed at addressing trade concerns.

According to the SBI report, India has been actively pursuing free trade agreements (FTAs) with several partners to strengthen export-oriented domestic manufacturing. In the last five years, India has signed 13 FTAs with trading partners including Mauritius, the UAE, and Australia.

Ongoing FTA negotiations with the UK, Canada, and the EU are focused on sectors such as services, digital trade, and sustainable development.

India and New Zealand have also announced the launch of negotiations for a comprehensive and mutually beneficial FTA. The agreement with the UK alone is expected to increase bilateral trade by USD 15 billion by 2030.

Future FTAs are expected to prioritise digital trade, with the digital economy projected to contribute USD 1 trillion to India's GDP by 2025.

“The shift towards regional supply chains and the impact of geopolitical changes, such as the US tariff war, are influencing India's FTA strategies to ensure alignment with global trade dynamics,” the report noted.

These FTAs cover a broad range of issues, including tariff reduction across manufacturing and agriculture, trade rules for services, digital trade regulations such as data localisation, intellectual property rights affecting pharmaceutical accessibility, and investment promotion and protection.

(KNN Bureau)

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