The US president Donald Trump’s plan to impose reciprocal tariffs on trade partners will not adveresly affect India much, but create opportunities for the country in several sectors, Niti Aayog programme director Pravakar Sahoo said on Friday. Unlike Mexico, China and Canada, which account for 50% of the US’s total imports and face 20-25% tariffs, India is favourably placed, he said.
“Except few sectors, most of the sectors we are going to benefit if what he (Trump) has proposed applies to all exporters to the US market. So, it’s a very dynamic scenario. But overall, I see it’s not much of impact on India,” Sahoo said after the release of the second edition of Niti Aayog’s quarterly trade watch.
Speaking at the event, Niti Aayog member Arvind Virmani noted the significant opportunities for India in the context of US trade policies and tariffs. “At this time in history, the important thing is for the world to diversify the supply chain. There is a tremendous concentration of manufactured exports in one country (China),” Virmani said. “So, if we compare our position…and post-imposition of these tariffs on our competitors in the US market, we are much better off,” he said.
A detailed analysis of the reciprocal tariff plan’s impact on India would be made in the next edition of the report.
Canada, Mexico and China account for 50% of the US’s total imports of $3.1 trillion.
The US has imposed 25% import duties on steel and aluminium products from March 12 and it has also announced a sweeping 25%tariff on completely built vehicles (CBUs) and auto parts with effect from April 3.
India and the US are aiming to conclude the first phase or tranche of the agreement by the fall of 2025 (September-October).
After the imposition of duties by the US in 2018, five countries including India gained from from the decline in the share of China in US imports.
The goal of FTAs and BTAs should be to facilitate the development of competitive supply chains, focusing on low or zero tariffs to enable seamless movement of goods, especially for network products like electronics, he said.
India should look for trade agreements with those countries with large shares of manufacturing, which are sources of FDI and which are the headquarters of MNCs as they can act as lead anchor investors. The top countries in this context are the US, EU, Japan, UK and South Korea, he added.
This edition of Trade Watch Quarterly also assesses India’s textile sector, a sector that continues to contribute significantly to industrial output, employment, and export earnings. Even though India is one of the top 10 world exporters, it has a modest 4% share in global trade. It suggested a concerted effort to increase India’s share globally.
India’s total trade grew by 5.67% in April–September 2024 compared to the same period in 2023, with exports rising 5.23% and imports increasing 6.07% year-on-year. India’s export composition remained stable, with a drop in mineral fuels; copper entered the top ten imports due to rising infrastructure demand.
The USA, UAE, and the Netherlands continue to be India’s leading export markets, accounting for 33% of total exports, with the Netherlands’ growth driven by smartphones and petroleum; the top five markets remain stable.