India less disadvantaged by US tariffs than neighbors.

India less disadvantaged by US tariffs than neighbors.

India’s effective tariff differential with the US is lower compared to South Asian rivals like Bangladesh, Pakistan, and Sri Lanka.

Despite Higher U.S. Tariffs, India Faces Lower Trade Disadvantage Than South Asian Peers: tvbharat24 Analysis

Even though the United States has imposed a steep 25% tariff on several Indian imports, India may still find itself in a relatively stronger trade position compared to its South Asian neighbors like Bangladesh, Pakistan, and Sri Lanka. A detailed tvbharat24 analysis of effective tariff rates — which consider real trade volumes and product-specific duties — reveals a nuanced picture that goes beyond the surface numbers.

While headlines may focus on the nominal tariff spikes affecting Indian goods entering the U.S. market, the actual impact appears to be softened by a mix of factors including trade diversification, product resilience, and India’s global trade positioning. In fact, India’s effective tariff differential — the gap between the tariffs imposed by the U.S. on India versus other South Asian exporters — turns out to be more favorable than expected.

Tariffs Tell Only Part of the Story

The 25% tariffs on some categories of Indian exports — especially steel, aluminum, and selected manufactured goods — were part of a broader U.S. strategy to reduce trade deficits and protect domestic industries. These measures, introduced during the Trump administration and continued under President Biden in some sectors, were often seen as punitive and damaging to U.S.-India trade relations.

However, experts point out that nominal tariffs don’t always reflect real trade disadvantages. For instance, although India’s tariffs are higher in percentage terms, its diversified export basket — which includes pharmaceuticals, IT services, textiles, and machinery — allows it to absorb some of the shocks better than economies that are more heavily reliant on a single or narrow range of exports.

On the other hand, countries like Bangladesh and Pakistan, which depend heavily on apparel and textile exports, are far more vulnerable to even small tariff changes. The U.S. has historically offered duty-free or low-duty access to some of these countries under schemes like the Generalized System of Preferences (GSP), but these benefits are not always reliable or permanent. In contrast, India has found strength in scale, reputation, and policy support to help its industries navigate protectionist headwinds.

India’s Resilience in Numbers

Trade analysts at tvbharat24 crunched data across product categories, trade volume, and tariff schedules to derive effective tariff burdens, revealing that India’s exporters may, in practice, face a tariff disadvantage that is lower than what exporters from Sri Lanka or Pakistan contend with.

For instance, India’s pharmaceutical exports — a key sector — continue to benefit from exemptions and favorable regulatory treatment in the U.S. despite the broader tariff regime. Similarly, sectors like services exports, which are less affected by tariffs, contribute significantly to India’s trade surplus with the U.S.

Strategic Positioning and Diplomacy

Beyond numbers, India’s strategic diplomacy with Washington plays a role. Despite ongoing friction over tariffs, immigration rules, and technology transfers, both nations continue to strengthen defense and strategic ties. Trade is increasingly being viewed through the lens of geopolitics. As tensions with China rise, India is being courted as a more reliable partner, particularly in supply chains for semiconductors, rare earths, and defense technologies.

Meanwhile, South Asian peers have not been able to leverage similar goodwill or strategic alignment. Bangladesh has been proactive in building trade ties with the U.S., but lacks the scale and global influence India commands. Pakistan remains weighed down by geopolitical concerns and security-related restrictions, while Sri Lanka’s economic instability makes it a fragile trading partner.

The Road Ahead

This relative advantage, however, does not mean India is immune to trade shocks. Tariff escalations still impact many of its MSMEs, especially those producing low-margin goods. And with the World Trade Organization (WTO) negotiations at an impasse, countries like India will need to rely on bilateral deals and smart trade diplomacy to secure better terms.

The upcoming India-U.S. Trade Policy Forum, scheduled later this year, is expected to address several long-pending issues including restoration of GSP benefits for India, resolution of digital tax disputes, and easing of visa restrictions on skilled labor.

Experts believe that while India must continue to advocate for tariff reductions, it should also double down on upgrading its export competitiveness, adopting technology, improving logistics, and reducing domestic regulatory bottlenecks.

Final Word

In the end, the numbers show that India, despite facing steep tariffs from the world’s largest economy, is far from isolated. In fact, it is weathering the storm better than many of its regional peers. Strategic partnerships, economic resilience, and trade diversification have helped soften the blow — and if leveraged wisely, they could turn a disadvantage into an opportunity.

As trade tensions evolve in an increasingly multipolar world, India appears not only to be holding its ground — but inching forward.