India well-placed to benefit from Trump’s tariff war on US trade partners: NITI Aayog

U.S. President Donald Trump’s tariff war against key trade partners has so far left India in a relatively strong and competitive position, despite facing marginally higher tariffs, according to an analysis by government think tank NITI Aayog. The quarterly Trade Watch report released today by NITI Aayog states this.

The report observed that the U.S. is a key market for several of India’s high-value and labour-intensive exports, absorbing a significant share of global shipments in select categories. “In 2024, the US accounted for over 30% of India’s global exports in electrical machinery, gems and jewellery, and pharmaceuticals. Notably, labour-intensive sectors such as apparel and made-up textiles also recorded a high US share—ranging from 31% to nearly 49%—underscoring the strategic importance of the US as both a scale- and value-driven market for India’s export basket,” it notes.

An analysis at the HS-2 level showed that when 91.4% of India’s total exports to the US are analysed, India is expected to gain in 22 out of 30 products, corresponding to a substantial gain across 61% of exports to the US. These products also represent a 68% share in total US imports, indicating their high importance in global trade, the report states.

In six of the top 30 categories, India faces slightly higher average tariffs—up to 3%—than other leading exporters, with the majority being only marginally higher (between 0–2%). These specific product categories account for over 12% of total US imports, underscoring the scale of opportunity available for Indian exporters. Additionally, these differences are modest and present a strategic opportunity for India to engage in targeted negotiations with the United States, the report says.

The US tariffs on Chinese products are also advantageous to India. “The average tariff differential between Indian and Chinese exports is 20.5% in India’s favour. By leveraging its comparatively lower tariff burden, especially in contrast to China, India is well-positioned to gain market share,” the NITI Aayog report states.

India’s relative tariff advantage vis-à-vis major competitors presents a strategic window to expand market share in the US market, especially in sectors such as pharmaceuticals, textiles, and electrical machinery, among others, the report says. The evolving global trade environment demands agile policymaking to capitalise on new trade alignments, it adds.