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According to a report by the State Bank of India (SBI), India should strengthen its Production-Linked Incentive (PLI) schemes to better compete in the evolving global trade environment. This recommendation comes in response to U.S. President Donald Trump’s announcement of reciprocal tariffs on several countries, including India. With increasing global trade competitiveness, the SBI report emphasizes that India has a significant opportunity to capitalize on shifts in trade patterns, especially following higher U.S. tariffs on Chinese goods.
Opportunities in Global Trade Shifts
The SBI report highlights that India stands to benefit from the global shift in trade, particularly due to the U.S. imposing higher tariffs on Chinese goods. With the changing dynamics, India has the potential to increase its exports, especially in sectors such as textiles, engineering goods, and gems and jewellery. The report suggests that the Indian government should expand its current PLI schemes across these key sectors to boost domestic manufacturing and exports.
The report recommends that the government widen the coverage of the scheme to include more products and extend its duration by three more years. This move, it states, would encourage investments in domestic industries and make Indian products more competitive in global markets.
India’s Advantage in U.S. Exports
One of the key areas where India stands to gain is in exports to the U.S. With Chinese goods facing higher tariffs, India has an opportunity to capture a larger share of the U.S. market. Sectors like textiles, apparel, and footwear can particularly benefit from this shift. India’s manufacturing strength in iron and steel products could also see an increase in demand due to these trade changes.
However, the report also points out that India faces a significant tariff imbalance with the U.S. Currently, the U.S. has imposed a 26 percent tariff on Indian goods, compared to India’s 15 percent tariff on American products. The report suggests that this issue should be addressed through ongoing trade negotiations between the two countries.
Potential for Growth in Export Sectors
The SBI report further emphasizes that the ongoing changes in tariffs could give Indian exporters an edge. With reciprocal tariffs being imposed by the U.S. on countries like China, Vietnam, Bangladesh, and Indonesia, India is well-positioned to benefit from these shifts. As global supply chains adjust, new opportunities for export growth are likely to emerge. Sectors such as textiles, engineering, and gems and jewellery are expected to see increased demand.
Trade Deal and Tariff Adjustments
India is reportedly willing to reduce tariffs on over USD 23 billion worth of American goods sold in India as part of the ongoing India-U.S. trade deal. This move could help resolve the tariff imbalance between the two nations and provide Indian exporters with a more favorable trade environment.
The report concludes by stressing that Indian exporters should be prepared to seize these potential gains, which could further strengthen India’s position in the global trade landscape.
(With Inputs From ANI)
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