India will see only a marginal direct effect from the recent 27% increase in tariffs on its exports to the United States, an SBI Research report published on Friday said. As exports to the US account for only 4% of India's GDP, the immediate spillover is likely to be limited.
Most importantly, India has been subjected to the lowest tariff increase among major Asian economies. Compared to this, China has been slapped with a 34% duty, Thailand 36%, Indonesia 32%, and Vietnam a whopping 46%. This relatively lenient treatment could make India a more desirable trading partner in the long term, the report stated.
"India is anticipated to have an export-oriented as well as a competitive edge across different sectors," the report indicated, pointing toward possible sectoral changes.
Sector-wise Impact:
Textiles:
India's textile industry may suffer a short-term setback as inflationary forces diminish the demand of US buyers. The rival nations, China, Bangladesh, and Vietnam, which are dependent on textile exports, have faced increased tariffs, providing India with a chance to increase its market share in the long run. India shipped approximately $7 billion worth of textile items to the US between April and December FY25.
Engineering Goods:
This industry can experience the maximum short-term disruption caused by supply chain problems and lower export revenue, as per the analysis.
Electronics:
India has the most to gain here. While China is hit by a huge 54% to 79% tariff on electronics, Indian exporters are comparatively better off. India exported approximately $9 billion worth of electronics to the US in April–December FY25, and it is the leading export segment with a 15% share.
Gems and Jewellery:
This sector is likely to be the most affected, as the US is likely to impose tariffs up to 20%—from the existing 0% on loose diamonds and 5.5–7% on gold jewellery. The US presently takes around $10 billion of India's $32 billion yearly gems and jewellery exports.
Agriculture and Seafood:
Indian farm exports could continue to be strong, or even increase, as other competing countries face higher tariffs. Seafood accounts for 3% of Indian exports to the US and amounted to $1.5 billion during April–December FY25. According to the SBI report, relative price stability and stable demand will help Indian seafood exporters.
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