Trump’s 27% tariff, not 26%, may boost India’s textile, semiconductor sectors over Asian peers: GTRI

NEW DELHI: The imposition of higher reciprocal tariffs by US President Donald Trump on several Asian and European countries, including China, Vietnam, Taiwan, Thailand, and Bangladesh, presents a strategic opportunity for India to strengthen its position in the global trade and manufacturing said GTRI Founder Ajay Srivastava

Srivastava added that goods from India will face a 25 per cent tariff on steel, aluminium, and auto-related goods, and no tariffs on pharmaceuticals, semiconductors, copper, or energy products.

For the remaining products, India will be taxed a reciprocal tariff of 27 per cent and not 26 per cent, as reported. The fine print of the notification says India will be subject to a tariff of 27 per cent, says Srivastava.

“Goods from India face a 25 per cent tariff on steel, aluminium, and auto-related goods, and no tariffs on pharmaceuticals, semiconductors, copper, or energy products. For the remaining products, India is subject to a reciprocal tariff of 27 per cent,” he said.

He highlighted that while India faces a 27 per cent tariff, the U.S. has set higher reciprocal tariff rates on goods from other countries, with China facing 54 per cent, Vietnam 46 per cent, Bangladesh 37 per cent, and Thailand 36 per cent. This relatively lower tariff on Indian goods gives India a competitive edge in several sectors.

One key area of opportunity is the textile and garment industry. The high tariffs imposed on Chinese and Bangladeshi textile exports create an opportunity for Indian manufacturers to increase market share, attract new production setups, and expand exports to the U.S.

Srivastava said, “One of the most prominent areas of opportunity lies in textiles and garments. The high tariffs on Chinese and Bangladeshi exports create room for Indian textile manufacturers to gain market share, attract relocated production, and increase exports to the U.S.”

Given India’s strong foundation in textile production and comparatively lower tariff rates, the sector is expected to witness higher global demand and new investments.

Another sector likely to benefit is electronics, including telecom and smartphones. With Vietnam and Thailand facing steep U.S. tariffs, they may lose their cost advantage. India, which has already invested in electronics manufacturing through government initiatives like the Production-Linked Incentive (PLI) scheme, can position itself as a preferred destination.

The semiconductor industry also offers potential growth opportunities; the 32 per cent tariff on Taiwan could encourage companies to relocate parts of their operations to India, provided the necessary infrastructure and policy support are in place.

Overall, the shift in US trade policies could benefit India by attracting investments in key industries and increasing its role in global supply chains. (ANI)