India’s exports to the US could decline 3-3.5% post reciprocal tariffs, which should be negated through higher export goals across both manufacturing and services fronts, SBI Research said Monday. This, it said, will be driven by India’s diversified exports kitty, value addition, alternate areas and new routes that transcend from Europe to the US via the Middle-East, redrawing new supply chain algorithms.
“We estimated the decline in exports in the range of 3-3.5% which again should be negated through higher export goals across both manufacturing and services fronts,” SBI Research said, adding that India stands to gain in an increasingly uncertain world of tariffs.
India has a $13 million trade deficit for aluminium and $406 million for steel with the US and can potentially take advantage of this. India is among the top 10 sources for aluminium for the US but its share has declined to 2.8% in 2024 from 3% in 2018.
India is negotiating free trade agreement (FTA) with the UK, Canada, and the EU, targeting sectors like services, digital trade, and sustainable development.
“The shift towards regional supply chains and the impact of geopolitical changes, such as the US tariff war are influencing India’s FTA strategies to ensure alignment with global trade dynamics,” it said.
The FTA with the UK alone is expected to increase bilateral trade by $15 billion by 2030. Future FTAs will likely focus on enhancing digital trade, with projections indicating that the digital economy could add $1 trillion to India’s GDP by 2025.
