Little impact on Indian exports from reciprocal US tariffs: SBI
What's the story
A report by the State Bank of India (SBI) has projected a minimal impact on Indian exports due to potential US tariff reciprocity. The analysis suggests that even if the US imposes higher tariffs of 15-20%, the overall decline in Indian exports to this market would only be about 3-3.5%. The US remains India's biggest export market, contributing 17.7% to total exports in FY 2023-24.
Trade dynamics
Improving trade ties with other countries
Notably, India is overhauling its export strategy to reduce reliance on any one market. This includes improving trade ties with Europe, the Middle East, and other regions, as well as improving supply chain networks for stable exports.
Tariff trends
Fluctuations in tariff policies
The SBI report also observed tariff policy fluctuations between the two countries. The US tariff rate on Indian imports increased a bit from 2.72% in 2018 to 3.91% in 2021, before declining slightly to 3.83% in 2022. Meanwhile, India's duties on American imports rose more sharply from 11.59% in 2018 to 15.30% in 2022, indicating a proactive trade strategy to protect domestic sectors and establish a balanced trade relationship.
Export strategy
India's focus on high-value exports
In a bid to increase the value of its exports, India is moving from raw materials to finished goods and high-value products. This not only aims at increasing export earnings but also at reducing the impact of tariff hikes. The strategy is aimed at keeping Indian goods competitive in the international market despite the possibility of increased US tariffs.