India Gains Edge in US Market Under New Tariff Regime

17 Jul 2025 CW Team

The third edition of Niti Aayog’s “Trade Watch Quarterly” for Q3 of FY25 highlighted that, under the current US tariff regime at the HS 2 level, India is likely to gain competitiveness in 22 of the top 30 product categories. These categories account for 61 per cent of India’s exports to the US and 68 per cent of total US imports.

The report stated that India’s relative tariff advantage presents a timely opportunity to expand its market share in the US, particularly in sectors such as pharmaceuticals, textiles, and electrical machinery. It called for agile policymaking to make the most of shifting global trade dynamics.

In categories where India does face a slightly higher tariff burden—six out of the top 30 HS 2 product lines—the average disadvantage is only about 1 per cent, implying that India remains broadly competitive across key sectors.

The report further noted that India stands to benefit from both high-value sectors, such as electronics and nuclear reactors, as well as labour-intensive segments like apparel and textiles, thanks to realigned tariffs imposed by the US on competing nations.

The analysis assumes a baseline additional tariff of 10 per cent on imports into the US from all countries except Mexico and Canada. However, imports from Mexico and Canada face even steeper tariffs of 25 per cent and 35 per cent respectively, while those from China are subject to an additional 30 per cent tariff.

The latest tariff schedule, updated as of 10 July 2025, has been incorporated into the assessment. Notably, reciprocal tariffs of 26 per cent (including the 10 per cent base) on Indian goods have been temporarily suspended until 1 August. If a pending interim trade deal between India and the US is not concluded by then, the US may consider imposing these reciprocal duties.

The report cautioned that the global trade landscape remains fluid, with future tariff actions likely depending on negotiations and trade agreements between the US and its various partners.

India is poised to gain a strategic edge in the United States market under the evolving US trade and tariff structure, offering an advantage over competitors such as China, Canada and Mexico in key sectors like nuclear reactors, iron and steel, textiles, electricals and vehicles, according to a Niti Aayog report.The third edition of Niti Aayog’s “Trade Watch Quarterly” for Q3 of FY25 highlighted that, under the current US tariff regime at the HS 2 level, India is likely to gain competitiveness in 22 of the top 30 product categories. These categories account for 61 per cent of India’s exports to the US and 68 per cent of total US imports.The report stated that India’s relative tariff advantage presents a timely opportunity to expand its market share in the US, particularly in sectors such as pharmaceuticals, textiles, and electrical machinery. It called for agile policymaking to make the most of shifting global trade dynamics.In categories where India does face a slightly higher tariff burden—six out of the top 30 HS 2 product lines—the average disadvantage is only about 1 per cent, implying that India remains broadly competitive across key sectors.The report further noted that India stands to benefit from both high-value sectors, such as electronics and nuclear reactors, as well as labour-intensive segments like apparel and textiles, thanks to realigned tariffs imposed by the US on competing nations.The analysis assumes a baseline additional tariff of 10 per cent on imports into the US from all countries except Mexico and Canada. However, imports from Mexico and Canada face even steeper tariffs of 25 per cent and 35 per cent respectively, while those from China are subject to an additional 30 per cent tariff.The latest tariff schedule, updated as of 10 July 2025, has been incorporated into the assessment. Notably, reciprocal tariffs of 26 per cent (including the 10 per cent base) on Indian goods have been temporarily suspended until 1 August. If a pending interim trade deal between India and the US is not concluded by then, the US may consider imposing these reciprocal duties.The report cautioned that the global trade landscape remains fluid, with future tariff actions likely depending on negotiations and trade agreements between the US and its various partners.

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