India–US trade deal gives comparative edge to Indian exports over regional rivals, says ASSOCHAM’s Sanyal
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The US decision to cut tariffs on Indian exports from 50% to 18% significantly boosts the cost competitiveness of Indian exporters in the US market, said Saurabh Sanyal, Secretary General of ASSOCHAM.
With tariffs now at 18%, India faces lower duties than key regional competitors such as Bangladesh and Vietnam, which are subject to 20% tariffs. Sri Lanka and Taiwan also attract higher tariffs while Pakistan’s exports to the US face duties of around 19%, placing India in a relatively advantageous position.
“The tariff gap can help India capture a larger share of international demand. Major Southeast Asian exporters like Indonesia, Malaysia, and Thailand are also subject to about 19% tariffs, higher than India’s new 18%. This enhances India’s comparative export advantage in apparel, footwear and electronics,” said Sanyal.
On Tuesday, India and the US reached a major trade agreement under which US tariffs on Indian exports have been reduced to 18%, down sharply from the much higher levels imposed last year. The announcement came after months of negotiations between Prime Minister Narendra Modi and US President Donald Trump, easing tensions that had built up over steep tariff hikes.
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Before the deal, India was facing 50% tariffs, combining a 25% reciprocal duty and an additional punitive levy linked to Russian oil purchases. The cut to 18% represents a significant improvement.
“The tariff reduction is a great breakthrough for Made in India products and enhanced access in the largest economy. This will deepen bilateral economic cooperation and trade trajectory. Lower tariffs will reduce cost disadvantages relative to regional peers, potentially attracting global buyers to source more from India,” he said.
Sanyal believed this trade deal will boost India’s labour-intensive sectors' market share. Even other big exporters like Canada (35%) and South Africa (30%) have significantly higher tariffs in the US market than India.
He further explained that this can strengthen India’s relative trade position. Sectors such as textiles, garments, footwear, and electronics where Asian peers dominate will benefit from India’s improved tariff advantage. This will boost India’s share in labour-intensive global value chains.
“The tariff cut complements India’s broader global trade strategy, including recent deals with EU and other partners to reduce barriers. India’s relative tariff advantage will help to connect more supply chain investments into India over peers like Bangladesh and Vietnam. This will influence regional industrial hierarchies in exports. Lower tariffs signal strengthened bilateral trade ties with the US, potentially setting stage for further negotiations on non-tariff barriers and services trade. This will sustainably enhance India’s export,” Sanyal added.