India’s Trade Advantage in a World of Tariffs: SBI Report
Trade Advantage : New Delhi [India], March 17: As global trade faces rising uncertainties due to tariffs and protectionist policies, India stands to gain by strategically navigating shifting trade dynamics, according to a report by SBI Research. The report highlights that despite potential setbacks from reciprocal tariffs imposed by the US, India is well-positioned to offset any decline through diversification, value addition, and expanded trade agreements.
Minimal Impact from US Tariffs on Indian Exports
The US administration’s proposal to impose reciprocal tariffs is expected to result in only a 3-3.5% decline in Indian exports, a manageable setback considering India’s proactive trade strategies. SBI Research suggests that India’s expanding export basket, increased focus on value addition, and exploration of alternative trade routes will help counteract the effects of these tariffs.
“The decline in exports from India to the US could be in the range of 3-3.5% post reciprocal tariffs, if any. However, this should be offset by higher exports across both manufacturing and services as India continues to diversify its export destinations and enhance value addition,” the report states.
India’s Position in the Global Steel and Aluminium Market
The report also highlights India’s position in the aluminium and steel sectors, which have been affected by recent US tariffs.
- Aluminium: India is among the top 10 aluminium exporters to the US, though its share has slightly declined from 3% in 2018 to 2.8% in 2024.
- Steel: While India accounts for just 1% of US steel imports, it maintains a marginal trade deficit of USD 406 million in steel goods.
Despite these figures, India has been proactive in countering trade restrictions by expanding its reach to newer markets and focusing on supply chain realignment.
Strategic Trade Agreements: Strengthening India’s Global Presence
One of the key strategies India is employing to mitigate the effects of protectionist policies is the signing of Free Trade Agreements (FTAs). Over the past five years, India has signed 13 FTAs, including key agreements with Mauritius, the UAE, and Australia. Currently, negotiations are underway with the United Kingdom, Canada, and the European Union to establish comprehensive trade partnerships.
- The India-UK FTA alone is expected to increase bilateral trade by USD 15 billion by 2030.
- Digital trade agreements could add USD 1 trillion to India’s GDP by 2025.
By leveraging bilateral and regional trade agreements, India is creating a resilient framework that will enable its businesses to thrive despite global trade disruptions.
Supply Chain Realignment: India’s Advantage
With increasing geopolitical tensions, particularly the US-China trade war, companies worldwide are looking to diversify their supply chains. India is emerging as a preferred destination for global manufacturers, with major players shifting production away from China. By capitalizing on this shift, India can strengthen its position in the global supply chain.
New trade corridors, such as the Europe-to-USA route via the Middle East, are being explored to enhance connectivity and reduce dependency on traditional routes. These initiatives are expected to boost India’s export potential significantly.
Financial Ratios and Trade Statistics
To provide a clearer picture of India’s trade performance, here are some key financial indicators:
| Indicator | Value |
|---|---|
| Projected decline in exports to the US | 3-3.5% |
| India’s share in US aluminium imports (2024) | 2.8% |
| Trade deficit in steel goods | USD 406 million |
| Total FTAs signed (last 5 years) | 13 |
| Expected bilateral trade growth (India-UK FTA) | USD 15 billion by 2030 |
| Contribution of digital trade agreements to GDP (2025) | USD 1 trillion |
India’s Path Forward in Global Trade
India’s proactive trade policies, FTAs, digital trade initiatives, and supply chain realignment indicate a strong foundation for sustained growth despite global economic uncertainties. By continuously expanding its export portfolio and leveraging strategic partnerships, India is well-positioned to capitalize on shifting trade dynamics and emerge as a key player in global trade.
Q&A Section for Quick Understanding
1. How will US reciprocal tariffs affect India’s exports?
The impact is expected to be minimal, with only a 3-3.5% decline in exports, which India can offset by expanding its export markets and adding value to its products.
2. What role does India play in the US aluminium and steel markets?
India is among the top 10 aluminium exporters to the US, although its share has declined slightly. In the steel sector, India contributes just 1% of total US imports but maintains a trade deficit of USD 406 million.
3. How is India countering global trade uncertainties?
India is signing more FTAs, diversifying exports, adopting digital trade agreements, and aligning with new global supply chains to minimize risks.
4. Which FTAs are expected to benefit India the most?
FTAs with countries like Mauritius, the UAE, and Australia have already been signed, while those with the UK, Canada, and the EU are under negotiation. The India-UK FTA alone could boost trade by USD 15 billion by 2030.
5. How will digital trade agreements impact India’s economy?
Digital trade agreements could contribute USD 1 trillion to India’s GDP by 2025, enhancing its position as a global digital economy leader.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.