Why are US tariffs hurting Indian exports despite free trade agreements?

India lacks a trade deal with the US, which imposes significant tariffs, while newer FTAs with smaller economies may not compensate for lost US market access.

Which Indian sectors are most affected by US tariffs?

Labor-intensive sectors like textiles, apparel, handicrafts, gems, and leather exports are bearing the brunt of the US tariffs.

What is Barclays' outlook on India's export growth with new FTAs?

Barclays economists believe the scale of new FTAs might not be enough to offset losses from US tariffs, stressing the need for tangible export growth.

Home / Business and Economy / India's FTAs Fall Short Against US Tariffs

India's FTAs Fall Short Against US Tariffs

19 Jan

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Summary

India lacks a trade deal with the US, facing high tariffs.
US is India's largest export market, significantly impacted.
New FTAs may not sufficiently boost exports to offset losses.

India's FTAs Fall Short Against US Tariffs

Barclays economists have cautioned that India's recent surge in free-trade agreements might not sufficiently mitigate the economic fallout from US tariffs on its exports. India, a major economy, notably lacks a trade deal with the US, subjecting its exports to some of the world's highest tariff rates. These levies have severely impacted labor-intensive industries such as textiles, handicrafts, and leather goods.

The absence of a US trade agreement creates uncertainty, straining the Indian rupee and prompting the government to allocate $5 billion to support exporters. This situation has intensified India's focus on negotiating trade pacts with other partners like the European Union, aiming to reduce trade barriers and project a more open economic image.

Economists note that even newly signed agreements, such as those with Oman and New Zealand, may not provide substantial export growth due to their relatively smaller trade volumes compared to the US market. The effectiveness of these agreements will be judged by their ability to translate into tangible export gains and bolster India's industrial base.