New Delhi: India now has one of the lowest tariffs among key Asian countries, with the US-India trade deal resulting in a reduction in tariffs on Indian goods to 18 per cent from 50 per cent earlier, and this will help in improving the country’s export competitiveness, according to an SBI Research report released on Wednesday.
The tariff rate for India is even lower than Vietnam, which is one of the major trading partners of the US, enabling Indian exports to regain competitiveness vis-a-vis other major Asian exporters, the report pointed out.
The SBI Research report sees the US-India and EU-India trade deals as major changes in the economic environment that will benefit India.
The report, which comes in the run-up to the RBI’s monetary policy announcement on February 6, expects the Reserve Bank to maintain a status quo.
It points out that despite policy rate easing, government bond yields have exhibited persistent hardening in recent periods. The choice of eligible securities itself may influence the effectiveness of open market operations (OMO), even when the aggregate quantum of liquidity injection is unchanged. The RBI is thus likely to maintain the status quo in the upcoming policy, it added.
However, the global economy continues to remain uncertain. The SBI’s Geo-Economics Stress Index reveals heightened uncertainty leads to economic stress with a lag of 3-4 months, the report observed.
It also pointed out that elsewhere, metal prices have recovered after witnessing a significant sell-off last week. A slack in the labour market, stagnant real disposable incomes alongside reduced inflationary impact might lead to US Fed rate cuts, the report stated.
Against this backdrop, Indian currency see-sawed between 89-92 per dollar for the past two month and has depreciated by 5.8 per cent against the US dollar (most amongst the major economies) since April 2, 2025, when US announced sweeping tariff hikes across economies, though it appreciated significantly (more than Re 1) after the India-US trade deal reducing the tariffs to 18 per cent, the report pointed out.
IT further states that new CPI weights with unchanged index domestic inflation indicates increase in overall CPI marginally by 20-30 bps. In the months when food inflation is higher, the new CPI will be lower by 20-30 bps.
(IANS)
