Last Updated:
The decline in exports from India to US could be in the range of 3-3.5 per cent post reciprocal tariffs, which should be negated through higher export goals across both manufacturing and services fronts as India has diversified its exports kitty, says SBI Research.
US President Donald Trump has vowed to impose reciprocal tariffs on India. (Photo Credit: X)
Even as US President Donald Trump has vowed to impose reciprocal tariffs on India, a report by SBI Research on Monday said the tariffs might impact India’s exports to the US by only 3-3.5 per cent which should be negated through higher export as India has diversified its exports kitty.
“The decline in exports from India to US could be in the range of 3-3.5 per cent post reciprocal tariffs, if any… which again should be negated through higher export goals across both manufacturing and services fronts, as India has diversified its exports kitty, pitched value addition, exploring alternate areas and works on new routes that transcend from Europe to USA via the Middle-East, redrawing new supply chain algorithms,” SBI Research said in a report.
On Trump’s 25 per cent tariffs on all steel and aluminium imports from March 13, the SBI Research report said India “can potentially take advantage” as it has a trade deficit for aluminium ($13 million) and steel ($406 million) trade with US.
Also Read: What Are Reciprocal Tariffs, How Can They Impact India, Its US Exports? All You Need To Know
It said the impact of geopolitical changes, such as US tariff war, and the shift towards regional supply chains are influencing India’s FTA strategies to ensure alignment with global trade dynamics.
“India is negotiating FTAs with the UK, Canada, and the EU, targeting sectors like services, digital trade, and sustainable development. The FTA with the UK alone is expected to increase bilateral trade by $15 billion by 2030. Future FTAs will likely focus on enhancing digital trade, with projections indicating that the digital economy could add $1 trillion to India’s GDP by 2025,” SBI Research said in its latest report.
On the US economy, SBI Research said its estimated Lowess Smoother confirm the declining trend in US real GDP growth.
“Long trends indicate possible downturn in US economy GDP growth along with slowdown in US exports and consumption…The overall value add is showing declining trend with shrinking TFP growth…. High US wages could hold back new investment….Net savings to GDP is also at the lowest level since 2011… second lowest since 1951,” it added.
The current tariff policy will have short term pain and US GDP will not see acceleration in material way, SBI Research said.
On the FII selling in India, it said while FY25 is expected to an FII outflow year, during FY24, India received FII inflows of $41 billion, highest since FY16.
“Sector wise data indicate that there are plethora of robust sectors, which received inflows in last 3 FYs,” SBI Research said.
