Which Indian sectors could benefit in US amid high China tariffs? Think tank answers

The imposition of steep 125% tariffs by the United States on Chinese imports has opened a window of opportunity for Indian products, especially in sectors like textiles, leather, engineering, and electronics, to gain a stronger foothold in the American market, think tank Global Trade Research Initiative (GTRI) said on Thursday.

However, the GTRI cautioned that the benefits of this move may be short-lived unless India takes proactive steps to strengthen its export ecosystem, streamline compliance procedures, and boost engagement with US buyers.

The latest executive order issued by the US government includes a 90-day suspension of country-specific tariffs for most nations, a decision that provides temporary relief for exporters. During this period, Indian products will face a flat 10% additional duty, much lower than the earlier proposed punitive tariffs of up to 26% on Indian goods.

“This temporary relief could help Indian products become more competitive in the US market, especially in sectors where India competes directly with China,” said GTRI Founder Ajay Srivastava.

He urged exporters to carefully review the US order and customs guidelines to identify affected products and exemptions.

According to the revised rules, if a product contains at least 20% US-made components, only the non-US portion will attract tariffs, provided value breakdowns are clearly declared.

Items shipped before April 5 and entering the US by May 27 will be exempt from new duties, while those shipped between April 5 and April 9 will be levied a flat 10% tariff.

Srivastava recommended that the government reintroduce the interest equalisation scheme to support small exporters with access to cheaper working capital and expedite customs processes to take full advantage of the limited timeframe.

Exporters have welcomed the US decision, calling it a strategic pause that could facilitate trade talks between India and the US.

"It is a good decision by the Trump administration. We have been assured by the commerce ministry that the agreement will be finalised at the earliest," said Federation of Indian Export Organisations (FIEO) President S C Ralhan.

Mumbai-based exporter S K Saraf noted that the high tariffs on China could also benefit Indian manufacturers by allowing imports of intermediate goods at lower prices, especially in sectors like textiles.

“For example, we can import different types of yarns from China and produce garments for exports. It’s a good opportunity for the elephant and dragon to come together,” Saraf said. "I think the pause would be extended further beyond 90 days and things will be normalised."

At a meeting with industry stakeholders on April 9, Commerce and Industry Minister Piyush Goyal assured exporters that India is working on a “right mix and right balance” in its proposed bilateral trade agreement with the US. He said negotiations are progressing with speed but not in “undue haste.”

India and the US are aiming to double their bilateral trade to USD 500 billion by 2030, from about USD 191 billion currently, with the first phase of the agreement expected to conclude by the fall of this year.