Indian exports are likely to suffer only a minimal disruption as a result of potential U.S. tariffs according to the recent analysis. The Indian exports are likely to decline by 3-3.5% even if the U.S. imposes higher tariffs in the range of 15-20%. This limited effect is due to the fact that India has followed a policy of export diversification, has added more value to its exports and has also explored new trade routes. Although the U.S. is India’s biggest export market and accounted for 17.7 per cent of total exports in FY2023-24, India has been working towards diversifying its markets to reduce dependence on one market. Engagement with Europe, the Middle East and other regions has been a major focus to ensure that the economy does not suffer from tariff volatility. Over the years, the U.S. tariffs on Indian goods have been on the rise, increasing from 2.72 per cent in 2018 to 3.91 per cent in 2021 and then marginally declining to 3.83 per cent in 2022. Indian tariffs on US imports, however, have risen sharply from 11.59 per cent in 2018 to 15.30 per cent in 2022. These tariff changes are in sync with India’s overall approach to support its domestic industries and increase the value of its exports. Indian manufacturers have now begun to concentrate on value addition to make their products more attractive in the international market. This approach not only increases the export revenue but also reduces the threats of tariffs hike. As India expands its trade area and strengthens its export regulations, the effect of US tariffs on Indian exports is expected to be small.
Indian Exports to Face Minimal Impact
