The potential for increased tariffs under the Trump administration poses a significant threat to certain segments of India’s export industry, including textiles, chemicals, metal products, and telecom products. While sectors like cut and polished diamonds and pharmaceuticals may remain relatively unaffected, others could face challenges due to increased competition from other countries.
Historically, India’s textile exports have been particularly vulnerable to broader trade policy changes in developed countries. Any adverse policy action, such as increased tariffs or taxes, could erode India’s competitive edge against countries like Bangladesh and Vietnam.
The auto component industry, which relies heavily on exports to the US, is another sector that could be impacted by potential tariff hikes. Increased costs could make Indian products less competitive in the global market.
Similarly, the dyes and pigments industry, a major export sector for India, could face challenges. While China’s presence in the market may stabilise prices, increased tariffs could lead to substitution from other countries.
The metals sector, while less reliant on exports, could also be affected. Downstream products like tubes, pipes, fittings, sheets, and foil may face increased costs due to additional duties.
The telecom products sector, which relies heavily on the US market, could be significantly impacted by tariff hikes. The US’s reliance on other countries with Free Trade Agreements could divert demand away from Indian products.
However, not all sectors are equally vulnerable. India’s dominance in the cut and polished diamond market, coupled with the US’s high reliance on Indian suppliers, suggests that any potential import levies would have minimal impact on overall exports.
Additionally, the US’s reliance on India for essential pharmaceutical products and agrochemicals is likely to limit any significant changes in tariffs or taxes on these items.
While India’s share of US merchandise exports has increased significantly in recent years, the potential for increased tariffs underscores the need for India to diversify its export markets and explore new opportunities to mitigate the impact of any adverse trade policies.
