India’s merchandise exports were over $437 bn in 2023-24, accounting for about 12% of GDP. US charging higher country-specific tariffs on China (125%) – even as it pauses on Vietnam (46%) and Bangladesh (37%), compared to India (26%) – increases India’s potential as exporter. Breaking it down to three sectors can be helpful:
In electrical, smartphones and electronic products, the US sources about 26% of its imports from China, 9% from Vietnam, and about 7% from India. Similarly, in machinery and mechanical appliances, China accounts for about 17% of US imports, while India contributes about 7%. These two sectors offer significant potential for expanding India’s manufacturing base and creating employment.
India integrating domestic manufacturing with global supply and value chains, particularly in the Asean region, could enhance cost-efficiency and global competitiveness, while also supporting job creation. But competition from countries like Mexico and Brazil, which benefit from lower tariff rates compared to India, must be acknowledged.
In pharma – where the US accounts for about 54% of India’s global exports, valued at over $12 bn annually – there is strong potential for further expansion, especially with zero tariffs currently in place. This should support jobs in pharma R&D and manufacturing, while attracting higher FDI and JVs into the country. In the case of gems and jewellery, the outlook is more optimistic for handcrafted pieces, thus supporting jobs in this niche area.
In textiles and garments, furniture, bedding, and plastics – sectors where India holds significant potential to increase exports and generate employment – China currently maintains a substantial export share to the US, while India is already present within the same product groups. These sectors represent opportunities where India could scale up production and employment, and improve competitiveness. But, once again, it must remain cognisant of competitors.Our relatively lower tariffs compared to key competitors. such as China, Pakistan, Bangladesh and Vietnam, can give us a clear edge. China currently supplies around 52% of the US’ textile and related imports, while India contributes about 17%. India can leverage on its strengths in skilled manpower, established textile clusters and rapidly attract more FDI. Labour-intensive categories such as toys, sports goods, rubber and leather footwear are areas where India can focus on rapidly building capacity, enhancing competitiveness. With a relatively modest export share in these sectors, India has a strong potential for investments and growth, which also aligns well with national priorities on inclusive and sustainable job creation.
Exports of petro products and organic chemicals are facing higher duties. Impact of competing countries in these segments – especially Canada and Mexico in petroleum – will require deeper analysis to assess the implications for India’s market share.
Expansion and sustained growth of manufacturing, including MSMEs, is essential for continued job creation. Implementing right strategies and leveraging both short- and long-term opportunities in targeted sectors as mentioned above can help foster a thriving ecosystem, and generate more employment opportunities.
