The report offers a comprehensive analysis of implications of US tariff on India and also offers insights for increasing India’s export competitiveness.
Implication of Current US tariff regime on India
- Market Share Expansion: India is positioned to gain market share in 61% of its trade value exports to the U.S.
- Competitive Advantage: India gains tariff edge over China, Mexico, and Canada in key sectors like nuclear reactors, iron and steel, textiles, electricals, and vehicles.
- Disadvantage: Average tariff disadvantage is only 1% where India faces slightly high tariff.
- Opportunities: In sectors of high value (e.g., electronics, nuclear reactors) and labour-intensive goods (e.g., apparel, textiles).
Policy measures to be adopted
- For boosting Merchandise Trade
- Enhancing Export Competitiveness: Expand PLI Scheme to labor-intensive sectors, rationalise electricity tariffs by reducing cross-subsidisation.
- Trade Facilitation and Market Access: Improve Authorised Economic Operator (AEO) Program, launch targeted schemes under Export Promotion Mission.
- Diversify Trade Partners and Agreements: Become part of bigger supply chains, India-EU FTA, Jan Vishwas 2.0.
- For boosting Service Trade
- Negotiate Services-Focused FTA on lines of building on the model of the India–UK agreement.
- Broaden Mutual Recognition Agreements (MRAs) to expand professional opportunities
- Simplify Licensing and Regulatory Compliance such as inconsistent data compliance and intellectual property concerns for service exports
- Promote Innovation and Skill Development by investing in upskilling and technology (E.g.digital health, fintech, cloud computing, and ed-tech
