Essential and strategic items such as pharmaceuticals, semiconductors, copper, and energy products like oil, gas, coal and LNG are exempted from the 27 per cent import duty announced by the US on Wednesday, according to think tank GTRI.
Photograph: David Swanson/Reuters
Overall, the Global Trade Research Initiative (GTRI) said that the USA’s protectionist tariff regime could act as a catalyst for India to gain from global supply chain realignments.
However, to fully leverage these opportunities, India has to enhance its ease of doing business, invest in logistics and infrastructure, and maintain policy stability, it added.
“If these conditions are met, India is well-positioned to become a key global manufacturing and export hub in the coming years,” GTRI founder Ajay Srivastava said, adding “there are goods that will face zero tariffs and these include essential and strategic items such as pharmaceuticals, semiconductors, copper, and energy products like oil, gas, coal, and LNG”.
The GTRI said that the imposition of higher reciprocal tariffs by the US on several Asian countries, including China, Vietnam, Taiwan, Thailand, and Bangladesh, presents an opportunity for India to strengthen its position in global trade and manufacturing.
However, gains will not accrue automatically, and India needs deep reforms for enabling scale production, domestic value addition and improving competitiveness to benefit, Srivastava said.
With the US setting a relatively lower reciprocal tariff rate of 27 per cent on Indian goods, compared to 54 per cent on China, 46 per cent on Vietnam, 37 per cent on Bangladesh, and 36 per cent on Thailand, “India gains a natural competitive advantage in several key sectors,” he added.
He said that one of the most prominent areas of opportunity lies in textiles and garments as the high tariffs on Chinese and Bangladeshi exports create room for Indian textile manufacturers to gain market share, attract relocated production, and increase exports to the US.
India’s strong base in textile production, coupled with lower tariffs, could drive greater global demand and new investments in the sector.
In the electronics, telecom, and smartphone sectors, countries like Vietnam and Thailand are likely to lose cost competitiveness due to the steep US tariffs, and this opens a window for India, which has already begun investing in electronics manufacturing through government incentives like the Production-Linked Incentive (PLI) scheme.
“The semiconductor space, while still dominated by technologically advanced players like Taiwan, also offers potential for India to capture parts of the value chain such as packaging, testing, and lower-end chip manufacturing,” he said.
Even a partial shift of supply chains from Taiwan due to tariffs (32 per cent) could benefit India if supported by adequate infrastructure and policy support.
Similarly, sectors like machinery, automobiles, and toys, where China and Thailand currently lead, are also vulnerable to tariff-related relocation.
Goods from India are already facing a 25 per cent tariff on steel, aluminium, and auto sectors.
For the remaining products, India is subject to a baseline tariff of 10 per cent between April 5-8.
Then the tariff will rise to country-specific 26 per cent starting April 9, he said.
On April 2, US President Donald Trump announced a major new tariff policy designed to reduce the US trade deficit and boost domestic manufacturing.
Over 60 countries are affected by the measures.
“Overall, the new policy imposes heavier duties on imports in order to rebalance trade, promote US manufacturing, and reduce reliance on foreign supply chains.
“The actual tariff a country faces depends on what it is exporting and how its trade practices align with US economic and national security interests,” Srivastava added.
