Indian exports may benefit as Trump imposes high tariffs on Sri Lanka, the Philippines

Rubies, tea and routers could be India's advantages

India could pose stiff competition to Sri Lanka and the Philippines for nearly a fifth of their exports to the United States as both countries are facing high import duties under new US trade arrangement, a Moneycontrol analysis shows.

The impact is expected to be sharper for Sri Lanka, where 21 percent or $618 million of its $2.98 billion exports to the US in 2023 could now face Indian competition. The island nation has been subjected to a 30 percent duty under the revised tariff regime announced by US President Trump on July 9.

The affected Sri Lankan exports include precious stones such as rubies and sapphires, along with garments such as men’s shirts, nightwear, and jerseys. Sri Lankan tea may also face pressure from Indian exports to the American market.

The analysis considered products with trade volumes over $5 million where India has the capacity to scale exports, and where Indian exports are either 50 percent higher or lower than that of the competitor's.

In the case of the Philippines, 17.2 percent of its $13.7 billion exports to the US could now face competition from Indian manufacturers. This includes routers, modems and inverters, which together accounted for over $1.25 billion of Philippine exports. Backpacks and gym bags too are vulnerable to Indian competition.

On the other hand, Brazil - now facing a steep 50 percent US duty - may be relatively shielded with only 7.4 percent of exports at risk, but the absolute gains for India could be higher at nearly $3 billion in potential trade shifts.

In 2023, the US imported goods worth $71.7 billion from these nations, while India’s exports were to the tune of $87.3 billion, according to UN COMTRADE data.

Earlier, Moneycontrol reported that Indian exporters may benefit from latest US tariffs on 14 nations, gaining an edge in about 27 percent of Myanmar’s, 22 percent of Bangladesh’s, and 19 percent of Indonesia’s exports to the US.

Although Sri Lanka received some relief - its tariff was reduced to 30 percent from 44 percent announced in April - the Philippines saw its duty rate increase from 17 percent to 20 percent.

India, which has not yet secured a trade deal with the US at the time of writing, could improve its export competitiveness if a preferential tariff agreement is reached or if it escapes the ire of the US president with lower duties.