India Better Positioned Than US Amid 25% Tariff: SBI Research

New Delhi, Aug 4 (KNN) The ongoing India-US trade standoff remains unresolved, with attention now focused on August 7—the date when the newly announced 25 percent tariff by President Trump is set to take effect. 

In a strong statement, SBI Research has criticised the move, calling it a ‘bad business decision’. The agency further asserted that the consequences are likely to be more detrimental for the US than for India, citing factors such as America’s lower GDP growth, higher inflation, and a weakening dollar.

In a comprehensive 25-page report, SBI Research noted that while the 25 percent tariff announcement may momentarily unsettle India, it is unlikely to cause lasting disruption. 

The report emphasised that the ‘mysterious forces of the global supply chain’ are expected to naturally recalibrate, helping to absorb the impact. It also encouraged Indian businesses to seize the moment by revitalising the ‘Made in India’ brand as a symbol of uncompromising quality.

The report noted that the US economy, with its lower GDP growth, higher inflation, and weakening dollar, is more vulnerable to a negative fallout. 

SBI attributes the stalled trade talks between India and the US to political factors rather than economic rationale, calling the use of trade negotiations as leverage ‘a fallacy’ in the current regime. 

On India’s side, the report acknowledges that the US is its top export destination, accounting for 20 percent of total exports in FY25. 

This share is expected to rise to 22.4 percent in FY26. Yet, due to India’s diversified export portfolio—where the top 10 countries represent just over half of total exports—the broader economic shock is expected to be manageable.

According to SBI Research, the tariff could lower India’s GDP growth by 25–30 basis points in FY26, a relatively moderate impact. 

The report also highlights that many Asian countries already face higher tariffs in the US market, and India’s relative position could still be safeguarded depending on the outcome of upcoming trade negotiations.

In conclusion, the report asserts that the tariff regime is unlikely to benefit either economy and warns that the US, in particular, risks deeper supply chain disruptions, drug shortages, and higher prices for essential goods—outcomes that could reverberate through its domestic economy in the months ahead.

(KNN Bureau)