Tariff challenge: India well-positioned to gain, says SBI Report
Virendra Pandit
New Delhi: Despite facing protectionist measures, India is effectively navigating the global trade landscape by exploring alternative markets and supplying chains, particularly between Europe and the US through the Middle East, the SBI Research said, the media reported on Monday.
India’s trade strategy includes forging Free Trade Agreements (FTAs) with countries like the UK, Canada, and the EU, aiming to boost bilateral trade and create new opportunities in digital trade, it said.
US President Donald Trump’s plan to impose reciprocal tariffs may only lead to a 3 to 3.5 percent decline in Indian exports, and the effect will be negated by higher exports, according to the report released on Monday.
“The decline in exports from India to the US could be in the range of 3-3.5 per cent post reciprocal tariffs, if any… which again should be negated through higher export goals across both manufacturing and services fronts, as 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.”
India will also get advantage of aluminium and steel tariffs imposed by the US last week.
The South Asian country runs a marginal trade deficit with USD 13 million in aluminium goods and USD 406 million in steel goods. While India doesn’t figure among the top 10 importers of steel products, accounting for just 1 per cent of imports to the US, it is among the top 10 in aluminium imports.
However, its share has dipped from 3 to 2.8 per cent between 2018 and 2024. India is countering this by diversifying its exports, adding value to products, and exploring alternative markets. By leveraging new trade routes from Europe to the US via the Middle East, India is looking to strengthen its position in the global supply chain.
With rising protectionist measures and evolving supply chain strategies, India is leveraging trade agreements and export diversification to strengthen its position in the global market.
The report stated, “India has been talking about free trade agreements with several partners – both bilateral and regional – in a bid to boost export-oriented domestic manufacturing.” To strengthen its manufacturing sector and increase exports, India has been actively engaging in Free Trade Agreements (FTAs) with multiple countries. In the last five years, India has signed 13 FTAs, including with Mauritius, the UAE, and Australia.
The country is currently negotiating agreements with the UK, Canada, and the European Union, focusing on areas such as digital trade, services, and sustainable development. The FTA with the UK alone is projected to boost bilateral trade by USD 15 billion by 2030. With a growing digital economy, experts believe digital trade agreements could add USD1 trillion to India’s GDP by the end of 2025. Additionally, shifting regional supply chains and geopolitical factors, including the US-China trade war, shape India’s trade strategies.
With ongoing trade negotiations and evolving global economic trends, India’s focus on FTAs, digital trade, and export expansion may help it navigate uncertainties and emerge stronger in the global market.
