New Delhi, Aug 27
As the higher US tariffs against Indian goods set to come into effect from Wednesday (US time), sectors such as textiles and gems and jewellery — both labour-intensive industries — are expected to face moderate pressures while pharmaceuticals, smartphones and steel are relatively insulated due to exemptions, existing tariff structures and strong domestic consumption.
A new SBI Research report believes that the US tariffs are likely to affect the US GDP by 40-50 bps and higher input cost inflation.
“As $45 billion of export will be impacted due to 50 per cent tariffs, at worst scenario, India’s trade surplus will convert to trade deficit. However, we believe trade negotiations will restore confidence and improve export to US,” the report mentioned.
Amid higher tariffs, India’s products might lose competitiveness potentially benefitting countries like China and Vietnam, as tariff imposed on India is also higher than that on other Asian countries such as China (30 per cent), Vietnam (20 per cent), Indonesia (19 per cent) and Japan (15 per cent).