As U.S. President Donald Trump mandates a 26 percent tariff on Indian goods, economists and industry experts believe that Indian exporters will face relatively fewer challenges compared to other major emerging markets in Asia. Among these economies, India’s tariffs remain the lowest, barring the Philippines.
According to economic experts, India is expected to be less impacted by the tariffs due to its inward-focused economy, unlike export-driven nations such as China, Japan, Vietnam, and Sri Lanka.
“This is expected to have a significant impact on U.S. inflation and global trade dynamics. Exporters from India are likely to face relatively less trouble, as among major emerging markets in Asia, tariffs on U.S. imports from India remain the lowest, barring the Philippines,” said Sonal Badhan, Economics Specialist at Bank of Baroda.
Reacting to the tariff announcements, industry body ASSOCHAM highlighted that the policy shift would trigger a major realignment in global trade and supply chains.
“Tariffs unveiled by President Trump last night will lead to a significant restructuring of global trade and manufacturing value chains. India has been placed somewhere in the middle, with tariffs set at 26 percent, in addition to a 10 percent baseline duty. The actual impact of these tariffs needs thorough assessment,” said ASSOCHAM President Sanjay Nayar.
Amid these changes, economists stress that India must strengthen domestic bank liquidity to support local businesses and consumers.
“Inward-focused economies like India should ensure strong bank liquidity so that financial institutions can lend freely to domestic retail borrowers and small business owners, helping sustain domestic consumption,” said Debopam Chaudhuri, Chief Economist at Piramal Group.
Kunal Chaudhary, Tax Partner at EY India, pointed out that the new tariffs create a dual-edged scenario for India’s manufacturing sector.
“On the one hand, India benefits from relatively lower tariffs compared to China, Thailand, and Vietnam, which could offer an arbitrage opportunity for Indian exports. However, on the other hand, Indian manufacturers might face intensified competition in other markets, as countries that traditionally focus on the U.S. market may now redirect exports to other nations to compensate for the losses,” said Chaudhary.
Under the new tariff policy, steel, aluminium, and auto-related goods from India will face a 25 percent tariff. Pharmaceuticals, semiconductors, copper, and energy products will remain tariff-free. All other goods from India will be taxed at 26 percent.
(Inputs from ANI)