US Tariff: India could see a loss of around $6 billion, or 0.16% of its GDP, in exports to the US if broad tariffs of 10% are enacted, Emkay Global, a research & investment firm, said in its latest report. The Financial services company said in the report that the impact could increase significantly, reaching up to $31 billion if tariffs rise to 25%.
While the specifics of reciprocal tariff measures remain uncertain, a broad country-level tariff on India appears to be the most likely scenario, the report added. Despite potential fallout in key sectors such as auto, pharma, and electronics, the report highlights that India’s most vulnerable industries are apparel and gems/jewellery.
Additionally, the report suggests potential “easy wins” in tariff negotiations, such as higher energy and defence imports, which could help mitigate some of the losses.
US Tariff: What Else?
“We identify these ‘Easy Wins’ as: i) increasing energy (crude oil, natural gas) imports from the US, ii) increase defence purchases and cooperation, iii) reduce tariffs on certain agri/food commodities, and iv) lower tariffs on foreign EVs,” the report said, adding that India should pursue negotiations with the US by offering concessions in some key sectors, which would not hurt domestic industry, but are important politically/economically for Trump, in exchange for tariff mitigation elsewhere.
The report adds that the broader US tariff war has aims beyond trade policy, with China likely to continue being targeted. It adds that India’s opportunity from this war is limited.
“India has not gained global market share in the low-skill areas that China has vacated post-Covid, and China exports relatively more complex products than India (75% of Chinese exports to the world are complex vs 45% for India), leaving limited opportunities for India,” the report added.
Beginning on April 2, the Trump administration intends to implement reciprocal tariffs on trading partners as part of the “Fair and Reciprocal Plan”.
In other developments, Arvind Virmani, Member Niti Aayog said that a bilateral trade between India and the US is likely to be signed by the end of the year. Meanwhile, on March 29, the US President Donald Trump said that the ‘tariffs are going to work out well between New Delhi and the Washington, DC,’ expecting a favourable outcome.
