2 days ago
India set to gain export edge in US as tariffs hit China, Mexico and Canada: Niti Aayog
Synopsis
A NITI Aayog report indicates that higher US tariffs on countries like China and Mexico could give Indian exporters a competitive advantage in sectors such as pharmaceuticals and textiles. India is poised to gain in a significant number of trade categories, potentially expanding its market share in the US.
AI generated image for representation purposes. Higher US tariffs on key trading partners like China, Canada and Mexico could hand Indian exporters a significant competitive edge, especially in sectors like pharmaceuticals, textiles and electronics, according to a new report by NITI Aayog.
In the latest edition of its Trade Watch Quarterly , the government think tank said that 'India is expected to gain competitiveness in 22 out of the top 30 categories (HS 2 level), representing a market size of USD 2,285.2 billion.'
These gains, it said, stem from steeper import duties imposed by the Trump administration–30% on China, 35% on Canada, and 25% on Mexico–making Indian goods relatively cheaper and more attractive in the US report focuses on how evolving US trade and tariff structures are reshaping global trade alignments and what this means for India. It argues that the real opportunity lies in the shifting landscape.'India's relative tariff advantage vis-a-vis major competitors presents a strategic window to expand market share in the US market, especially in sectors such as pharmaceuticals, textiles, and electrical machinery, among others,' the Aayog said. It added that capitalising on these openings will require agile policy responses from India.
According to the analysis, India's competitiveness remains unchanged in 6 out of the top 30 HS 2-level categories, segments that account for 32.8% of its exports to the US and 26% of total US imports, worth $26.5 the bigger story lies in the potential gains. In 78 products that make up more than half (52%) of India's exports to the US, and a quarter of the US's total imports, India stands to gain ground. These include minerals and fuels, apparel, electronics, plastics, furniture and seafoods, spanning a market worth $1,265 India faces some headwinds. In six product categories, Indian exporters face a marginally higher average tariff (1–3%) than their competitors. These could be subject to negotiation. At a more granular level, in 17 of the top 100 products at the HS-4 level, accounting for 28% of India's US-bound exports, the competitive position remains unchanged due to the absence of any tariff boost its export play, the Aayog has recommended expanding production-linked incentive (PLI) schemes to more labour-intensive sectors like leather, footwear, furniture and handicrafts. It has also called for rationalising industrial electricity tariffs by cutting cross-subsidies and increasing the use of renewable energy, moves that could lower manufacturing costs and improve export the policy front, it suggested following the India–UK model and negotiating a services-focused trade deal with the US. This pact, the report said, should include strong provisions on digital trade and target sectors like information technology, financial services, education and professional services.'The agreement should include robust provisions for digital trade, creating a framework for enhanced cross-border service delivery,' the Aayog a team from India's commerce ministry has landed in Washington for another round of talks on the proposed bilateral trade agreement (BTA), with negotiations kicking off Monday. The two sides are aiming to conclude an interim deal by the fall, with the broader agreement expected to take shape in the months timing is critical. The US has extended its deadline to impose additional tariffs on several countries, including India, until August 1. The last round of India–US trade talks ran from June 26 to July 2. Talks have resumed amid lingering disagreements in key sectors such as agriculture and has resisted US demands for duty concessions on agri and dairy imports, noting that it hasn't made such concessions in any of its previous free trade agreements. It's also pushing for the rollback of steep tariffs on Indian steel (50%), aluminium (50%), and automobiles (25%).Under World Trade Organization rules, India has kept the option of retaliatory tariffs tariff blitz began with an announcement on April 2, targeting several countries including India. The move was deferred first to July 9 and then to August 1. As of July 7, the US had issued tariff letters to a wide group of countries—including Japan, South Korea, Indonesia, Malaysia, Thailand, South Africa and several US wants duty relief on industrial goods, automobiles (especially EVs), wines, petrochemical products and a range of agricultural imports like dairy, apples, tree nuts and GM in return, is pushing for concessions for its labour-intensive exports, including textiles, gems and jewellery, garments, plastics, chemicals, leather goods, shrimp, oil seeds, grapes and a deal is struck, it could shift the equation in the world's largest consumer market, and possibly mark a reset in the Indo–US trade dynamic.
