India has a comparative edge over key competitors in a majority of products it exports to the US and stands to gain market share as the US raises tariffs on its major trade partners, NITI Aayog said on Monday.
Photograph: Amit Dave/Reuters
In its quarterly trade report, it recommended that the government fast-track the India-US free trade agreement with time-bound goals to resolve non-tariff barriers and finalise digital trade rules on data flows and e-signatures to support services exports.
The Aayog’s assessment is based on the assumption that India will face an additional 10 per cent tariff, while several other countries — including competitor nations such as China, Mexico, and Canada — will be subjected to 20–50 per cent tariffs.
The Centre’s official policy think tank analysed product categories based on Harmonized System (HS) Codes — both at the two-digit level (HS2: broad product category) and four-digit level (HS4: specific product category).
“In HS2, tariffs on competitors are higher than India’s in 22 of the top 30 products.
“In six of the top 30 categories, India faces slightly higher average tariffs — up to 3 per cent — than other leading exporters, with the majority of them marginally higher, between zero and 2 per cent.
“These specific product categories account for over 12 per cent of total US imports, underscoring the scale of opportunity available for Indian exporters,” the Aayog’s Trade Watch Quarterly said.
According to the Aayog, in 80 of the top 100 products at the HS4 level, competitors face higher tariffs than India.
These products represent a large share of both India’s export basket to the US and total US imports, the think tank said.
These product lines account for 22 per cent of India’s total exports to the US, with an export value of $17.66 billion. High tariff differentials — particularly in sectors such as 63 (other made-up textile articles), 85 (electrical machinery and equipment), and 84 (nuclear reactors, machinery and parts) — where competitors face higher tariffs, present India with opportunities to strengthen its market position, the Aayog said.
In 2024, India’s bilateral merchandise trade with the US stood at $123.8 billion, with a trade surplus of $37.7 billion in India’s favour.
US President Donald Trump has been ramping up pressure on countries to lower tariff barriers by concluding trade agreements with the US. Since last week, he has sent formal letters to over two dozen trade partners — primarily in Asia — threatening them with steep reciprocal tariffs from August 1, while leaving room for negotiations.
So far, India has been kept out of the list. India and the US are currently working towards finalising an interim trade deal before the deadline.
The Aayog recommended that the ongoing negotiations for a trade deal with the US focus on key service sectors such as financial services and information technology.
It also called for improved visa access for Indian professionals, particularly under the H-1B and L-1 visa categories.
“This should include provisions for intra-corporate transferees and independent service providers, which are crucial for maintaining India’s competitive edge in the global services industry,” it said.
According to the Aayog, India should also seek firm market access in areas like cybersecurity, artificial intelligence, telecommunications, and design services.
It added that joint efforts between India and the US are needed to simplify licensing procedures and address cross-border data flow issues, enabling smoother market access for Indian firms.
