SBI Report: Bilateral Talks Yield Advantages for India Amid US Tariffs
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Synopsis
A recent SBI Research report highlights that US trade tariffs may be less impactful than anticipated, with bilateral negotiations providing vital benefits for India. These discussions foster cooperation in defense, energy, technology, and investments, ensuring a dynamic trading environment. The report emphasizes India's adaptability in export strategies amidst evolving tariff landscapes.
Key Takeaways
- US tariffs may not significantly hinder Indian exports.
- Overall bilateral negotiations create collateral benefits for India.
- India's export strategies are adapting to changing tariffs.
- The US remains India's top export destination.
- India and the US aim to enhance their bilateral trade.
New Delhi, Feb 17 (NationPress) The reciprocal US trade tariffs may ultimately be more of a distraction, while overall bilateral discussions yield significant advantages for India by creating a supportive atmosphere for collaborative growth in areas such as defense, energy security, innovation, technology, critical minerals, maritime security, investments, and higher education, according to a recent report from SBI Research published on Monday.
The report asserts that the largest democracy in the world is a natural ally of the US in the Indian Ocean, viewed from both a strategic and economic standpoint.
“Our projections indicate that even with tariff levels reaching 15% to 20% imposed by the US, the effect on exports to the US would only be around 3% to 3.5%, which can be offset by ambitious export targets,” the SBI report elaborated.
The country has diversified its export base, focused on value addition, and is pursuing new trading routes that stretch from Europe to the US via the Middle East, thereby reconstructing supply chain networks that enhance strategic inclusiveness, the report noted.
Both the US and India have modified their tariff frameworks over time, showcasing the changing landscape of trade policies and economic priorities.
While US tariffs on Indian exports have maintained relative stability, India’s tariff adjustments have been more fluid.
“The US tariff on Indian products rose from 2.72% in 2018 to 3.91% in 2021, before a slight decrease to 3.83% in 2022. Conversely, India’s tariffs on US imports climbed from 11.59% in 2018 to 15.30% in 2022,” the report detailed.
The US remains India’s leading export market, comprising 17.7% of total exports in FY24.
“We have also evaluated the potential decrease in Indian exports if the US enacts a retaliatory tariff of 15% (three times the current total). This analysis captures how sensitive exports are to tariff changes,” the SBI report highlighted.
This year, both nations anticipate signing a new ten-year 'Framework for the US-India Major Defense Partnership in the 21st Century'. The objective is to more than double the bilateral trade to $500 billion by 2030.
