US tariffs likely to have minimal impact on Indian exports, says SBI report

The SBI report estimates India's exports to decline only by around 3-3.5% even if the US imposes higher tariffs in the range of 15-20%.

The Impact of US tariffs on Indian exports may be minimal, according to an article by news agency ANI which cited a report by State Bank of India.

US President Donald Trump speaks in the Oval Office of the White House in Washington, DC (Reuters)

The report estimates India's exports to decline only by around 3-3.5% even if the US imposes higher tariffs in the range of 15-20%.

This is because the impact can potentially be offset by India's strategic export diversification, increased value addition and exploration of new trade routes, according to the report.

This is despite the US being India's top export destination, accounting for 17.7% of total exports during the financial year 2023-24.

However, India is also evolving its export strategy to reduce its dependence on a single market with growing trade ties in Europe, the Middle East and other regions.

The concerns over US tariffs come at a time when US tariffs on Indian goods remain relatively stable over the years, but India's tariff policies are more dynamic.

US tariff rates on Indian goods increased from 2.72% in 2018 to 3.91% in 2021 before slightly decreasing to 3.83% in 2022, according to the report which added that India's tariffs on imports from the US rose more significantly, from 11.59% in 2018 to 15.30% in 2022.

The Indian tariffs are mainly to protect domestic industries which have also been focusing on value addition to exports. This strategy not only enhances export earnings, but also reduces the potential impact of tariff hikes ensuring that Indian goods remain competitive in global markets.