NEW DELHI: A broad trade deal between India and the US could give a big boost to India’s exports and manufacturing capacity, helping the country’s economy grow steadily in the long run, according to a new Bloomberg Economics report.
The US, currently India’s largest export destination accounting for 19.3% of outbound goods, could see imports from India nearly double over the next decade if a broad trade deal is signed.
Economists Abhishek Gupta and Eleonora Mavroeidi told Bloomberg that this would also lift India’s GDP by 0.6%. Factoring in services, total exports to the US are projected to rise by 64%.
Most of the projected gains would come from sectors such as textiles and light manufacturing, including products like toys, furniture and other consumer items. The report suggests such a trade pact could “mark an inflection point” for India’s domestic manufacturing industry.
Indian and US negotiators are working against a tight July 9 deadline, after which higher tariffs are set to take effect. The urgency stems from the risk of India facing steeper duties if no agreement is reached.
With the US already imposing significant tariffs on Chinese and Vietnamese goods, a deal with India, even one involving a 10% tariff could position the South Asian nation as an attractive alternative for global businesses seeking supply chain diversification.
Failing to secure a trade pact could prove costly. Bloomberg Economics warns that India may lose over one-third of its direct exports to the US and suffer a 0.7% GDP decline if reciprocal tariffs rise to 26%.
India was one of the first nations to enter trade talks with the US this year. Prime Minister Narendra Modi made several key concessions early on to build goodwill. However, the discussions have since hit friction, particularly over sensitive areas like agriculture, with both sides adopting a tougher stance.
Source: The Financial Express
