The reciprocal tariffs announced by the U.S. President Donald Trump against its key Asian trade partners, including China, Vietnam, Taiwan, Thailand, and Bangladesh, presents an opportunity for India to strengthen its position in global trade and manufacturing, says New Delhi based think tank Global Trade Research Initiative (GTRI).
The relatively lower reciprocal tariff rate of 27% on Indian goods — compared to 54% on China, 46% on Vietnam, 37% on Bangladesh, and 36% on Thailand — gives India a natural competitive advantage in several sectors like textiles and garments, electronics, semiconductors, machinery, and toys among other things, the GTRI analysis shows.
“One of the most prominent areas of opportunity lies in textiles and garments. High tariffs on Chinese and Bangladeshi exports create room for Indian textile manufacturers to gain market share, attract relocated production, and increase exports to the U.S. India’s strong base in textile production, coupled with lower tariffs, could drive greater global demand and new investments in the sector,” the think tank points out.
According to GTRI, in the electronics, telecom, and smartphone sectors, countries like Vietnam and Thailand are likely to lose cost competitiveness due to the steep U.S. tariffs. This opens a window for India, which has already begun investing in electronics manufacturing through government incentives like the Production-Linked Incentive (PLI) scheme. As global brands seek to diversify supply chains away from high-tariff countries, India can emerge as a preferred destination for new manufacturing setups and component assembly lines, it says.
The semiconductor space, while still dominated by technologically advanced players like Taiwan, also offers potential for India to capture parts of the value chain such as packaging, testing, and lower-end chip manufacturing, GTRI analysis says. Even a partial shift of supply chains from Taiwan due to tariffs (32%) could benefit India if supported by adequate infrastructure and policy support, it adds.
Sectors like machinery, automobiles, and toys—where China and Thailand currently lead—are also seen as vulnerable to tariff-related relocation. GTRI feels that with strategic planning, India can attract foreign direct investment in these areas, scale up domestic production, and cater to markets like the U.S. that are seeking alternate sources for imports. “Overall, the U.S.’s protectionist tariff regime could act as a catalyst for India to gain from global supply chain realignments. However, gains will not accrue automatically. India needs deep refoto enableling scale production, domestic value addition and improving competitiveness to benefit. To fully leverage these opportunities, India must enhance its ease of doing business, invest in logistics and infrastructure, and maintain policy stability. If these conditions are met, India is well-positioned to become a key global manufacturing and export hub in the coming years,” said Ajay Srivastava, founder of GTRI.
