US tariff reduction puts India at an advantageous position to China: Report
New Delhi, Feb 3 : The reduction of US tariffs on India effectively takes India’s rate below most ASEAN peers and puts it at an advantageous position compared to China, a report showed on Tuesday.
US President Donald Trump announced that the US and India had agreed on a trade deal, under which reciprocal tariffs on India will be lowered to 18 per cent from 25 per cent earlier.
There was no explicit mention of how the additional punitive tariff of 25 per cent (due to Russian oil purchases) will be treated, although US Ambassador to India Sergia Gor said in press comments that the final tariff rate will stand at 18 per cent (from 50 per cent earlier), according to the report by DBS Bank.
"At the onset, this breakthrough is unequivocally positive for the real economy/exports, sentiments as well as financial markets, while further details are awaited," DBS Group Research Senior Economist Radhika Rao said.
"To our understanding, tariffs under Section 232 of the Trade Expansion Act will be exempt from this tariff relief, similar to the treatment for other nations. This will apply to sectors like auto and auto parts (25 per cent tariff), steel and aluminium (50 per cent), lumber and copper, etc. This is likely to impact about a tenth of the export basket," she contended.
As for fuel imports from Russia, imports of petroleum, crude, and products from Russia moderated to $33 billion in FY26 (year to date) compared to annual $53.5 billion in FY25.
There were earlier reports that private sector refiners had sharply reduced purchases following US sanctions on specific Russian entities last year.
The US has moved from the sixth largest supplier of petroleum and crude in FY25 to fifth in FY26 YTD. Full-year nominal fuel imports from the US are on course to be higher in FY26 than in FY25, said the report.
"Textiles, gems and jewellery, engineering goods, leather, and chemicals are likely among the key gainers in the immediate term," said Rao.
An eventual unveiling of the bilateral trade agreement will provide more details on the beneficiary product lines and trade as well as investment commitments, she added.
US President Donald Trump announced that the US and India had agreed on a trade deal, under which reciprocal tariffs on India will be lowered to 18 per cent from 25 per cent earlier.
There was no explicit mention of how the additional punitive tariff of 25 per cent (due to Russian oil purchases) will be treated, although US Ambassador to India Sergia Gor said in press comments that the final tariff rate will stand at 18 per cent (from 50 per cent earlier), according to the report by DBS Bank.
"At the onset, this breakthrough is unequivocally positive for the real economy/exports, sentiments as well as financial markets, while further details are awaited," DBS Group Research Senior Economist Radhika Rao said.
"To our understanding, tariffs under Section 232 of the Trade Expansion Act will be exempt from this tariff relief, similar to the treatment for other nations. This will apply to sectors like auto and auto parts (25 per cent tariff), steel and aluminium (50 per cent), lumber and copper, etc. This is likely to impact about a tenth of the export basket," she contended.
As for fuel imports from Russia, imports of petroleum, crude, and products from Russia moderated to $33 billion in FY26 (year to date) compared to annual $53.5 billion in FY25.
There were earlier reports that private sector refiners had sharply reduced purchases following US sanctions on specific Russian entities last year.
The US has moved from the sixth largest supplier of petroleum and crude in FY25 to fifth in FY26 YTD. Full-year nominal fuel imports from the US are on course to be higher in FY26 than in FY25, said the report.
"Textiles, gems and jewellery, engineering goods, leather, and chemicals are likely among the key gainers in the immediate term," said Rao.
An eventual unveiling of the bilateral trade agreement will provide more details on the beneficiary product lines and trade as well as investment commitments, she added.