New Delhi [India] : A recent SBI Research report suggests that US President Donald Trump’s proposed reciprocal tariffs may result in only a 3-3.5% decline in Indian exports. However, this dip is expected to be offset by India’s proactive export diversification and value-added product strategies.
Key Findings from SBI Research
- The projected decline in exports is manageable due to India’s ongoing efforts to expand trade across manufacturing and services sectors.
- India’s focus on value addition and establishing new trade routes — connecting Europe to the US via the Middle East — is seen as a stabilizing factor.
- India’s strategic shift in supply chain models aims to mitigate disruptions caused by global economic shifts.
Impact on Aluminium and Steel Exports
- India’s share in US aluminium imports has slightly decreased from 3% to 2.8% between 2018 and 2024.
- In the steel sector, India contributes just 1% to total US steel imports, meaning limited impact on this front.
- The report notes that while tariffs may affect select sectors, India’s diversified export portfolio reduces overall vulnerability.
Leveraging Free Trade Agreements (FTAs)
To strengthen trade resilience, India has pursued several FTAs in recent years, signing agreements with countries like:
- Mauritius
- United Arab Emirates (UAE)
- Australia
Ongoing negotiations with the UK, Canada, and the European Union aim to expand India’s trade reach, focusing on sectors such as:
- Digital Trade
- Services
- Sustainable Development
Economic Growth Projections
- The FTA with the UK alone is anticipated to boost bilateral trade by USD 15 billion by 2030.
- Digital trade agreements could potentially add USD 1 trillion to India’s GDP by 2025, highlighting the nation’s growing digital economy.
Conclusion
While the proposed tariffs present short-term risks, India’s focus on export diversification, value addition, and FTA expansion positions the country to weather trade uncertainties and emerge stronger in the global market.