The United States’ newly announced reciprocal tariff plan has positioned India relatively better than its Asian counterparts, opening up opportunities for New Delhi to strengthen its exports in key sectors. While the U.S. has imposed a “discounted reciprocal tariff” of 26% on Indian goods, other major Asian economies, including China, Vietnam, Bangladesh, and Thailand, face significantly higher duties. This shift could allow Indian exporters to gain market share in textiles, electronics, telecom, and smartphone manufacturing.
Although the tariff measures present challenges for India, they also provide strategic openings for expanding its exports to the U.S. By capitalizing on this opportunity, India could boost its global trade footprint and attract foreign direct investment (FDI) in key manufacturing sectors.
India faces a 26% U.S. tariff, while China and Vietnam face 54% and 46%, respectively.
Higher U.S. duties on Asian competitors open doors for Indian exports.
Key sectors that could benefit include textiles, electronics, and telecom.
India must undertake structural reforms to fully leverage the situation.
India Gains an Advantage as U.S. Targets Other Asian Economies
The U.S. decision to impose steeper tariffs on Asian peers has led to speculation about how India can capitalize on the shifting trade landscape. China faces the heaviest impact, with a 54% tariff, followed by Vietnam (46%), Bangladesh (37%), Thailand (36%), and Taiwan (32%). While India is not immune from U.S. trade restrictions, its relatively lower tariff burden presents an opportunity to improve its export competitiveness in the American market.
According to Madhavi Arora, Chief Economist at Emkay Global, India is in a better position compared to other emerging market economies in Asia, as it is “less export-exposed” than its regional peers. This means that while India will experience some trade losses, the overall impact may be mitigated due to its diversified economic structure.
The U.S. is imposing significantly higher tariffs on China, Vietnam, and Bangladesh.
India’s export exposure is lower compared to other Asian nations.
A recalibration of global supply chains could benefit India in the long run.
India must enhance domestic value addition to maximize export growth.
Potential Growth Sectors: Textiles, Electronics, and Telecom
India’s textile and garment exports could benefit directly from steeper U.S. tariffs on China and Bangladesh, while the electronics, telecom, and smartphone sectors could gain from higher duties on Vietnam and Thailand. This creates an opportunity for India to increase its outbound shipments, particularly in these high-growth areas.
Ajay Srivastava, Founder of the Global Trade Research Initiative (GTRI), emphasized that while the tariff hikes could favor Indian exporters, the country must undertake deep structural reforms to ensure long-term competitiveness. He highlighted the need for scaling up production, increasing domestic value addition, and improving cost efficiency to seize the opportunity fully.
Indian textile exports could gain from U.S. tariffs on China and Bangladesh.
Higher U.S. duties on Vietnam and Thailand create openings in electronics and telecom.
Structural reforms are needed to make Indian exports more competitive.
Domestic manufacturing must scale up to meet rising global demand.
Challenges and Risks: The Fallout of Higher U.S. Tariffs
While India has been dealt a better hand compared to some of its Asian neighbors, it is not entirely shielded from the negative consequences of U.S. tariff policies. According to estimates by Emkay Global, India’s exports to the U.S. could decline by $30-33 billion at the 26% tariff rate, even before factoring in cross-country effects or potential retaliatory measures.
Srivastava cautioned that India cannot expect automatic gains from the situation. Instead, policymakers must focus on reforms that enhance production efficiency, reduce costs, and increase export resilience. Federation of Indian Export Organisations (FIEO) President S.C. Ralhan echoed similar sentiments, noting that while India’s position remains comparatively favorable, proactive measures are needed to ensure long-term benefits.
India’s exports to the U.S. could fall by $30-33 billion due to tariffs.
Policy reforms are crucial for maintaining export competitiveness.
Trade diversification and FDI inflows could help offset losses.
The Indian government must act swiftly to capitalize on the shifting trade environment.
U.S. Announces Additional Baseline Tariffs Starting April 5
Adding to the complexity of the trade landscape, President Trump on April 3 confirmed a baseline 10% tariff on imports from all foreign countries, with an additional 16% tariff on India set to take effect from April 10. This means that Indian goods entering the U.S. will face a total tariff burden of 26%, which, while lower than the duties imposed on other Asian nations, still presents a significant challenge for Indian exporters.
Srivastava noted that key sectors such as machinery, automobiles, and toys—where China and Thailand currently lead—could experience a shift in production due to higher tariffs. He suggested that with the right strategic planning, India could attract FDI in these sectors, strengthen its domestic manufacturing base, and cater to markets looking for alternatives to Chinese and Southeast Asian exports.
The U.S. will impose a baseline 10% tariff on all imports from April 5.
An additional 16% tariff on Indian exports will take effect from April 10.
Higher duties on China and Thailand may push global manufacturers to look at India.
India has an opportunity to expand in machinery, automobiles, and toy manufacturing.
India-U.S. Bilateral Trade Agreement: A Possible Solution?
Experts believe that a timely Bilateral Trade Agreement (BTA) between India and the U.S. could help mitigate the effects of Trump’s reciprocal tariffs and provide a structured framework for resolving trade disputes. Such an agreement could offer tariff concessions for Indian exporters while also allowing for lower duties on U.S. goods entering India.
FIEO’s Ralhan emphasized that a BTA could create a balanced and stable trade environment, reducing the risk of unpredictable tariff hikes. Madhavi Arora of Emkay Global added that India could negotiate tariff reductions in select sectors, such as agriculture and automobiles, in exchange for trade benefits from the U.S.
Currently, both nations are discussing the contours of the BTA under the broader “Mission 500” initiative, which aims to double bilateral trade in goods and services to $500 billion by 2030. India and the U.S. are targeting an initial agreement by the fall of this year, with the first phase expected to cover multiple high-impact industries.
A Bilateral Trade Agreement (BTA) could help offset U.S. tariffs.
The agreement could provide structured tariff relief for Indian exporters.
India and the U.S. are targeting a trade volume of $500 billion by 2030.
The first phase of the agreement is expected to be finalized later this year.
India’s Trade Standing with the U.S.
In 2023, total bilateral trade in goods and services between India and the U.S. stood at $190.08 billion, making America India’s largest export destination. India was the tenth-largest exporter to the U.S. in 2024, with exports valued at $91 billion. However, it still lagged behind top trading partners such as Mexico, China, and Canada.
As the U.S. trade landscape evolves, India must position itself strategically to navigate the shifting dynamics. With the right policy support, domestic reforms, and trade agreements, India has a unique opportunity to expand its role in global supply chains and strengthen its export footprint in the U.S. market.
India’s total trade with the U.S. reached $190 billion in 2023.
India ranked tenth among top exporters to the U.S. in 2024.
Mexico, China, and Canada remain the top three U.S. trading partners.
Strategic planning is essential for India to maximize trade opportunities.
