India is relatively insulated from the sweeping reciprocal tariffs imposed by the United States due to its lower export dependency and modest trade surplus with the US, Reserve Bank of India governor Sanjay Malhotra said on April 9.
His comments came on the day the so-called tit-for-tat duties took effect, sending markets reeling across the world over fears of a prolonged trade war and a global slowdown.
“Our export dependency is around 20-30 percent of GDP, far less than many peers,” Malhotra said at the customary post monetary policy committee meeting press conference.
The RBI governor said India has a comparative advantage over countries such as China, Germany and smaller export-heavy nations such as Vietnam and Taiwan.
“This gives us a cushion against global trade shocks like these tariffs. While it’s still a growth dampener, we’re better placed than countries with heavier reliance on US markets."
US president Donald Trump has slapped a tariff of 26 percent on Indian goods, 104 percent on Chinese products, 46 percent on Vietnam and 32 percent on Taiwan.
Official data pegs India’s exports to the US at roughly 2 percent of its GDP, a stark contrast to China’s 19 percent, Germany’s 37 percent, and the European Union’s 30 percent plus.
Vietnam and Taiwan, with export dependencies nearing 80 percent, are poised to be hit much harder.
“We have a comparative advantage vis-à-vis some of these countries as far as the US is concerned,” he said, hinting at potential opportunities for India to capture supply chain shifts away from nations such as like China and Vietnam.
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