New Delhi, April 4 (NationPress) A recent report indicates that the anticipated direct effects of US reciprocal tariffs will differ across various sectors in India. Notably, pharmaceuticals remain unaffected as they are currently exempt from these tariffs. Meanwhile, the impact on electronics, textiles, agricultural products, chemicals, and automobiles is expected to be largely neutral.

In contrast, the gems and jewellery sector may face adverse effects, according to findings from CareEdge Ratings. For FY24, India's total merchandise exports to the US reached $77.5 billion, while imports from the US were $42.2 billion.

Previously, the US imposed an average tariff of 3.50% on imports from India, which is now set to be uniformly raised to 27% as a reciprocal tariff.

The report highlights that the reciprocal tariffs imposed by the US on other countries competing with India in these sectors are significantly higher, with Vietnam at 46%, Bangladesh at 37%, China at 34%, Taiwan at 32%, Indonesia at 32%, and Pakistan at 29%. This scenario is advantageous for key Indian export sectors.

In the electronics realm, increased reciprocal tariffs on China should result in a neutral effect on India's electronics exports, the report states.

Other significant textile exporters to the US include China, Vietnam, Bangladesh, and Turkey. Except for Turkey, which faces a 10% reciprocal tariff, other countries are subject to tariffs exceeding 26%, limiting the impact on India's textile sector.

Moreover, since most of India's exports consist of cotton-based garments and home textiles, the nation's self-sufficiency in cotton production is expected to allow it to effectively absorb the higher reciprocal tariffs.

India boasts one of the largest numbers of US FDA-approved manufacturing plants, primarily serving the US's generic medication needs. This is vital for providing cost-effective healthcare solutions. Even though the pharmaceutical sector currently enjoys an exemption from reciprocal tariffs, it is well-equipped to manage potential future tariffs due to its competitive advantages.

India's overall agricultural exports to the US are relatively modest. The reciprocal tariff of 26% compared to a prevailing weighted average tariff of 5.3% is offset by higher tariffs on key agri-exports from major competing nations like Vietnam, Indonesia, Thailand, and Pakistan, which should mitigate the overall impact.

However, with Ecuador being the second-largest shrimp exporter to the US, Indian shrimp exporters might face pricing pressures due to Ecuador's lower tariff of 10%.

Exports of automobiles and components to the US are currently low, leading to a minimal anticipated impact from the reciprocal tariffs. Additionally, these auto component exports are essential for US OEMs, making it challenging for them to quickly find alternative low-cost approved vendors from other countries, thus helping India cope with the short to medium-term tariff increases.

Nevertheless, the imposition of high reciprocal tariffs on competing nations raises concerns about potential dumping by these countries into India and other export markets.