Sun Apr 06 08:14:09 UTC 2025: ## India Braces for US Tariffs, Sees Potential Long-Term Gains

**NEW DELHI** – India’s equity markets experienced a brief period of uncertainty as President Trump’s new 26% tariff on Indian exports to the US, in addition to a 10% baseline duty, came into effect. While initial concerns focused on potential damage to sectors like electronics, gems, and jewelry, experts are increasingly optimistic about India’s long-term prospects.

The new tariffs, which took effect Wednesday, are considered less severe than initially feared, partly due to India’s relatively small share of global exports (2.4% in 2023). Furthermore, the higher tariffs imposed by the US on competing economies, such as China, Vietnam, and Indonesia, are expected to create a significant advantage for Indian exporters.

India’s strategic decision not to retaliate against the US tariffs is seen as a shrewd move, bolstering its position in ongoing bilateral trade agreement negotiations. The US has prioritized talks with India, sending officials exclusively to negotiate tariff issues, highlighting the importance of the relationship. These negotiations aim to address various issues, including deeper supply chain integration.

India’s proactive approach extends beyond the US, with ongoing free trade agreement talks with seven countries and upcoming discussions with Bahrain and Qatar. This diversification strategy, coupled with the government’s focus on domestic manufacturing initiatives like “Make in India” and “Atmanirbhar Bharat,” is expected to mitigate the impact of the tariffs.

While acknowledging a short-term impact on certain sectors, industry bodies like the PHD Chamber of Commerce and Industry (PHDCCI) estimate the overall GDP effect will be minimal (0.1%), citing India’s price competitiveness and supportive government policies. The Federation of Indian Export Organisations (FIEO) even predicts market opportunities could increase by over $50 billion for Indian exporters in the next two to three years as a result of the altered global landscape.

Experts believe that the tariffs will force Indian exporters to adapt and innovate, leading to the emergence of new business models and a stronger, more diversified export sector. Specific sectors like textiles, garments, and electronics are poised to benefit from the reduced competitiveness of other nations. India’s potential to become a key player in semiconductor manufacturing is also being highlighted. Despite the immediate challenges, India’s robust domestic market and ongoing economic growth provide a strong foundation for weathering the short-term effects of these tariffs.

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