India May Gain from Global Tariff War: Insights from Chief Economic Adviser
India could benefit from the global trade realignments triggered by the ongoing tariff war, according to Chief Economic Adviser (CEA) V Anantha Nageswaran. Speaking on the economic implications of the United States’ reciprocal tariffs, Nageswaran highlighted that despite short-term uncertainty, India stands to gain in selected sectors, thanks to shifting global supply chains and strategic trade negotiations.
What’s the Tariff War About?
The Trump-era tariff policy introduced reciprocal duties on several trading partners, including India and China.
On April 2, the US imposed a 26% reciprocal tariff on Indian goods.
This was temporarily suspended for 90 days, until July 9, but the baseline 10% US tariff remains in place.
India and the US are currently engaged in talks to finalize an interim trade deal and eventually a comprehensive bilateral trade agreement (BTA).
Opportunities Emerging for India
According to CEA Nageswaran, India is positioned to benefit in sectors where it previously lacked a competitive edge:
1. Manufacturing & Supply Chain Realignment
With trade friction between the US and China, global firms are diversifying sourcing.
India can step in as a reliable alternative hub, especially in electronics, pharmaceuticals, and auto components.
2. Low Energy Prices Boost Cost Competitiveness
Nageswaran emphasized India’s current advantage from relatively low energy prices, which improves manufacturing margins.
Competitive energy costs give India an edge over higher-cost Asian economies.
3. Textiles and Apparels
With tariff hikes affecting Chinese textile exports to the US, Indian textile exports may gain traction.
Potential boost for Indian MSMEs in yarn, garments, and finished goods.
4. Pharmaceuticals and Specialty Chemicals
US–India Trade Snapshot
Bilateral trade value (FY25): $131.84 billion
US share in India’s exports: 18%
US share in India’s imports: 6.22%
India’s merchandise trade with US: 10.73%
India’s trade surplus with US in FY25: $41.18 billion (up from $35.32 billion in FY24)
The growing trade surplus has raised concerns in the US, adding pressure on India to expand American imports or provide reciprocal market access.
What Lies Ahead?
Both nations are aiming to conclude the first phase of the BTA by September–October 2025.
New Delhi is lobbying for complete exemption from the 26% tariff as part of the interim deal.
If successful, Indian exporters may gain unhindered access to one of their largest global markets.
Conclusion
While tariffs often pose trade barriers, India is strategically navigating the situation to unlock new opportunities. With policy agility, sectoral focus, and trade negotiations, India could emerge as a key beneficiary in the evolving global trade landscape. The tariff war might just turn into a windfall for India's targeted sectors.
Written by Indira Securities SEBI Registered with 30 plus years of experience in Stock Market!!!