India Faces $6 Billion Hit Amidst Potential US Tariff Imposition

A report by Emkay Global reveals India might lose USD 6 billion in exports to the US if 10% tariffs are enacted, potentially soaring to USD 31 billion with 25% tariffs. Sectors like auto and electronics face uncertainty, while apparel and gems/jewellery remain most vulnerable. Strategies for mitigation include increased energy imports and defence deals.

India stands at a critical juncture as a recent Emkay Global report projects a potential loss of USD 6 billion, equivalent to 0.16% of its GDP, in exports to the United States if the latter enacts a 10% broad tariff.

This financial strain could escalate significantly, reaching as high as USD 31 billion, should tariffs rise to 25%, the financial services firm outlined.

The report underscores the looming challenge across pivotal sectors like automobiles, pharmaceuticals, and electronics, identifying apparel and gems/jewellery as particularly vulnerable.

While details of potential reciprocal tariffs remain uncertain, such a broad country-level imposition on India seems the most plausible outcome.

Nevertheless, the report proposes 'easy wins' in tariff negotiations, emphasizing areas such as enhanced energy imports, increased defence procurements, and recalibrated tariffs on specific commodities to alleviate some economic pressure.

The broader US tariff actions, with aims extending beyond mere trade policy, continue focusing on China, leaving limited opportunity for India, which shares less complexity in its exports compared to its Chinese counterparts.

The Trump administration is poised to implement reciprocal tariffs under the 'Fair and Reciprocal Plan' starting April 2, marking a new phase in the trade discourse.

On a positive note, Arvind Virmani from Niti Aayog indicated optimism over a potential bilateral trade agreement between India and the US by year-end, echoed by US President Donald Trump's confidence in achieving a satisfactory tariff resolution with New Delhi.

(With inputs from agencies.)