India set to gain export edge in US as tariffs hit China, Mexico and Canada: Niti Aayog

By Admin

15 Jul, 2025

Introduction
India is on the cusp of a major opportunity in global trade. According to NITI Aayog’s Trade Watch Quarterly, rising tariffs imposed by the US on major trading partners like China, Mexico, and Canada could significantly benefit Indian exporters. This shift in global trade dynamics may allow India to capture a larger share of the American market, especially in high-potential sectors like pharmaceuticals, textiles, and electronics.

US Tariffs Reshape Trade Routes
The US, under a revised trade regime, has levied steep tariffs   30% on Chinese goods, 35% on Canadian exports, and 25% on Mexican products. This has created a tariff differential that makes Indian exports relatively more cost-competitive. As NITI Aayog notes, "India is expected to gain competitiveness in 22 out of the top 30 categories (HS 2 level), representing a market size of USD 2,285.2 billion."

Key Sectors Ready for Expansion
India is particularly well-positioned in sectors such as:

• Pharmaceuticals
  
  

• Textiles and apparel
  
  

• Electronics and electrical machinery
  
  

• Plastics, minerals, and seafood
  
  

In 78 product categories that constitute over 52% of India’s exports to the US, Indian goods may now appeal more to American buyers due to their lower price point relative to other countries. These products represent a market worth $1,265 billion, offering a huge growth window.

Challenges and Limitations
Despite the optimism, the Aayog highlights that India’s competitive position remains unchanged in six top HS-2 categories, representing a significant portion of US imports and Indian exports. Moreover, in six categories, Indian products face slightly higher tariffs (1–3%) compared to rivals. Additionally, in 17 out of the top 100 HS-4 products, India’s position remains static due to a lack of tariff differential.

Strategic Policy Recommendations
To truly seize this trade opportunity, NITI Aayog recommends several strategic moves:

• Expand the PLI scheme to include labour-intensive sectors like leather, footwear, furniture, and handicrafts.
  
  

• Rationalise industrial electricity tariffs, reduce cross-subsidies, and promote renewable energy to lower production costs.
  
  

• Pursue a services-focused trade agreement with the US, similar to the India–UK model, especially targeting digital trade, IT, education, financial, and professional services.
  
  

Trade Talks in Progress
As this new trade reality unfolds, an Indian commerce ministry delegation is in Washington for fresh negotiations. A bilateral trade agreement (BTA) is in the works, with hopes to finalize an interim deal by the fall. Discussions include contentious areas such as:

• US demands: Duty relief on industrial goods, EVs, wines, petrochemicals, and agri-products (dairy, nuts, apples, GM crops).
  
  

• India’s push: Removal of steep tariffs on steel (50%), aluminium (50%), and automobiles (25%), and better access for labour-intensive exports.
  
  

India has refused to offer blanket duty concessions on sensitive agri and dairy products consistent with its previous FTAs and continues to reserve the right to impose retaliatory tariffs under WTO rules.

Conclusion: A Strategic Window of Opportunity
As the US tariff structure evolves, India stands at a crossroads of global trade realignment. With the potential to improve its competitiveness in over 70 product lines and a growing alignment of trade interests, Indian exporters could see a significant rise in their US-bound shipments. Timely policy support and a strategic trade deal could help India establish itself as a reliable alternative in the world’s largest consumer market.

This is more than a tariff game it's a moment to redefine India's export future.