Insights

• The State Bank of India believes that even if the proposed India-US trade deal doesn't come up as desired and 10-per cent additional tariffs are imposed, India can still diversify its exports.
• India's total exports may not be significantly hit under such a condition, it noted.
• As the US tariffs on most Asian nations are higher than on India, this offers scope for India to raise its exports to the US.

The State Bank of India (SBI) believes that even if the proposed India-US trade deal doesn’t come up as desired and 10-per cent additional tariffs are imposed on India, there are various avenues for India to diversify its exports.

With India’s service exports reaching a new high each year, a record $387.5 billion in fiscal 2024-25, India’s total exports are not likely to get significantly affected, SBI said in a recent research note.

“The final call on India-US trade deal will be in coming days, with the mini trade deal likely to be announced by mid-July. As per the latest information, India has already presented a final ‘decent offer’ from its side, which will be reviewed by those calling the shots at the Capitol,” it said.

India’s proposal covers goods trade worth around $150 billion to $200 billion between the two countries, the note said.

As the United States has increased tariffs on 23 countries, with most Asian countries having higher tariffs than India, this opens up opportunity for India to raise its exports to the US, especially of those commodities in which it has revealed comparative advantage, SBI observed.

Among the top five imports by the United States, India has RCA only in chemicals, for which China and Singapore have higher share of exports to the US compared to India.

India can also capture apparel exports share of Bangladesh, Cambodia and Indonesia. Currently India’s share of apparel exports in US imports is 6 per cent, and if India can capture another 5 per cent from these countries, then it can add 0.1 per cent to its gross domestic product, the research note said.