US tariff reset boosts India's export edge: Niti Aayog says India gains ground in 100 product lines, services and tech drive Q3 resilience
India stands to expand its footprint in the US market under Washington's evolving tariff regime, with favourable differentials in over 100 key product categories, according to the government think tank
Niti Aayog
's Trade Watch Quarterly report for Q3 FY25.
'India is expected to gain competitiveness in 22 of the top 30 product categories at the HS-2 level, covering 61% of its exports to the US and 68% of total US imports in these categories,' the report said. At a more detailed HS-4 level, India has a favourable tariff differential in 78 of the top 100 products, accounting for around 52% of its shipments to the US.
The opportunity arises from higher US import tariffs on key trade partners such as China, Canada, Mexico, Vietnam, and Thailand.
This policy shift, which includes a baseline 10% duty on all imports since April 2025, presents Indian exporters with a 'strategic window' to gain share in sectors ranging from nuclear reactors and electrical machinery to vehicles, apparel, and textiles.
Even in six of the top 30 HS-2 product lines where India faces a tariff disadvantage, the gap is just around 1%, keeping it broadly competitive, the think tank noted.
Despite global demand headwinds and geopolitical uncertainty, India's Q3 FY25 trade data reflected 'cautious resilience'. Merchandise exports grew 3% year-on-year to $108.7 billion, while imports rose 6.5% to $187.5 billion—widening the merchandise trade deficit to $78.7 billion.
However, services exports surged 17% to $102.6 billion, creating a $52.3 billion surplus that 'partially offset' the goods trade gap.
Niti Aayog highlighted that India ranked as the world's fifth-largest exporter of Digitally Delivered Services (DDS) in 2024, clocking $269 billion in exports. This was driven by segments such as IT services, professional consulting, and R&D outsourcing.
Among merchandise exports, the report noted a sharp rise in high-tech and value-added sectors. Aircraft, spacecraft, and related parts surged by over 200% and entered the top 10 export categories for the first time, thanks to demand from Saudi Arabia, the UAE, and the Czech Republic.
India's high-tech exports reached $80.6 billion in 2024, growing at a CAGR of 10.6% since 2014 and accounting for 18.3% of total merchandise exports. Electrical machinery and parts now make up half of India's high-tech shipments, surpassing nuclear reactors and boilers.
In digitally delivered trade, 'Other Business Services' accounted for 53% of 2024 DDS exports, while 'Computer Services' contributed 39%, aligning with global patterns.
The think tank stressed that new trade alignments—particularly India's relative tariff edge in the US—underscore the importance of agile policy responses. 'India must deepen global value chain integration, expand production-linked incentive schemes to labour-intensive sectors, and pursue services-focused trade agreements,' the report said.
It added that a deal with the US should prioritise digital trade, cross-border data flows, and mutual recognition of standards to further widen India's export footprint.
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