Synopsis
The new US tariffs create a unique opportunity for Indian exporters to thrive, especially over China, as they face significantly higher duties. India must capitalize on this advantage across various sectors, particularly electronics and electric vehicles, while also fostering trade agreements.Key Takeaways
- India benefits from lower tariffs compared to China.
- Potential growth in electronics exports to the US.
- Collaboration with FTA partners can enhance supply chains.
- India's electric vehicle market shows promise for US market share.
- Government support is crucial for boosting auto component manufacturing.
New Delhi, April 3 (NationPress) The reciprocal tariffs enforced by the US are set to impact every nation; however, Indian exporters could stand to gain significantly as their main competitor, China, faces tariffs that could soar to 65 percent and even higher.
For India, the additional 27 percent tariff places it within the lower spectrum of targeted nations, paving the way for opportunities beyond conventional export markets such as engineering goods, electronics, gems and jewellery, textiles, and apparel.
"These tariffs might also enhance India's competitiveness in sectors where other regional players suffer greater losses. To capitalize on this edge, India should engage in negotiations with the US for continued market access and work closely with FTA partners in Asia to revamp supply chains and explore new avenues," remarked Agneshwar Sen, Trade Policy Leader at EY India.
In the last fiscal year (FY 2023–24), India exported electronics worth $10 billion to the US.
The ICEA anticipates the potential to elevate this figure to $80 billion annually across various electronics product categories in the upcoming years, dependent on ongoing policy backing and a favorable tariff scenario, with bilateral trade surpassing $100 billion.
Experts assert that while US tariffs will exert some influence, India could gain as China's cumulative tariffs, including earlier actions, range from 54 percent to as much as 154 percent, while Vietnam faces 46 percent.
Pankaj Mohindroo, Chairman of ICEA, stated that a genuine long-term turning point for India's electronics trade with the US hinges on the rapid and successful finalization of a comprehensive Bilateral Trade Agreement (BTA).
According to Saurabh Agarwal, Partner and Automotive Tax Leader at EY India, India's electric vehicle sector holds a prime chance to capture a more substantial portion of the US market, particularly in the budget car segment.
"China's 2023 auto and component exports to the US reached $17.99 billion, while India's amounted to only $2.1 billion in 2024, underscoring the potential for expansion," he noted.
To expedite this growth, experts recommend that the government enhance the PLI scheme by incorporating more auto components, inviting new participants, and extending it by an additional two years.
