Donald Trump’s sweeping tariff plan has shaken global trade, but for India, this disruption may create a rare window of opportunity. While Indian exports to the US will face tariffs of up to 27% starting 9 April, analysts believe global supply chain realignment could work in India’s favor.
Although Trump’s official tariff chart lists India’s rate at 26%, the presidential order cites 27%. This discrepancy, seen for other countries too, has triggered confusion. Before this hike, the US maintained one of the world’s lowest average tariff rates at just 3.3%, compared to India’s 17%, according to the White House.
However, with China now facing a total 54% duty, and similar hikes for Vietnam (46%), Thailand (36%), and Bangladesh (37%), Indian manufacturers may find new opportunities in key sectors like textiles, electronics, and machinery, according to the Delhi-based Global Trade Research Initiative (GTRI).
Textiles are a top contender. As Chinese and Bangladeshi exports become less competitive due to steep duties, India could expand its share in the US apparel market. Likewise, India could tap into semiconductor packaging, testing, and low-end chip assembly, especially if some US buyers shift production away from Taiwan, now subject to a 32% tariff.
According to GTRI, machinery, automobiles, and toys—traditionally dominated by China and Thailand—may also migrate to Indian factories. But to benefit, India must scale production, improve infrastructure, and attract global investment.
Still, challenges loom.
Despite recent export growth, India runs a large trade deficit and controls only 1.5% of global exports. Many fear that Trump’s “reciprocal tariffs” could hurt India’s already fragile competitiveness. The US president has repeatedly labeled India a “tariff king” and a “big abuser” in trade.
Ajay Srivastava of GTRI agrees that the protectionist wave could spark opportunity, but only under the right conditions. “To fully benefit, India must improve its ease of doing business, enhance logistics, and ensure policy consistency,” he said.
Others are more skeptical. Biswajit Dhar, a trade expert from the Council for Social Development, warned that countries like Malaysia and Indonesia are better positioned to capture shifting supply chains. “India neglected garments as a growth sector. Without new investments, we can’t absorb the diverted demand,” Dhar noted.
Since February, India has attempted to win Trump’s favor. The country pledged $25 billion in energy imports, reduced duties on bourbon whiskey, luxury cars, and solar cells, and scrapped its 6% digital services tax. Trade talks have intensified, aimed at narrowing the US’s $45 billion trade deficit with India.
Even so, India could not avoid the blow of tariffs.
“This is a serious setback,” said Abhijit Das, former head of the Centre for WTO Studies. “There was hope that talks would shield us. Now, we’re facing higher duties at a critical time.”
One silver lining: pharmaceuticals are exempt. India supplies nearly 50% of generic drugs used in the US, accounting for 90% of all prescriptions. That sector, for now, remains untouched.
In contrast, electronics, engineering goods, and marine products could face serious losses. India has heavily invested in electronics manufacturing under its Production-Linked Incentive (PLI) schemes. A 27% duty could erase those gains.
Dhar raised further concerns: “Most Indian exporters are small and cannot absorb such high duties. Add to that high logistics costs and poor trade infrastructure, and we begin at a disadvantage.”
Many experts believe Trump is using tariffs as leverage in ongoing talks with India. A recent US Trade Representative (USTR) report underscored Washington’s frustrations. It criticized India’s strict import rules, slow GMO approvals, and price caps on medical devices. It also flagged India’s data localization laws and satellite restrictions, warning these measures resemble China’s model.
The report estimates that lifting these trade barriers could boost US exports by $5.3 billion annually.
“The timing couldn’t be worse,” Dhar added. “Being in the middle of negotiations weakens our hand. And we won’t outcompete Vietnam or China overnight—it takes time to build strength.”
India now finds itself at a crossroads. While the tariffs impose immediate costs, they also bring long-term possibilities. If India seizes the moment to reform and invest, it could emerge stronger in the global trade arena.
