New Delhi and Washington's trade deal could augment South Asian nations' exports. The manufacturing sector will also be boosted, leading to sustained growth. According to Bloomberg Economics, this comprehensive trade deal could prove to be a boon for South Asia's exports and the manufacturing sector.
According to economists Abhishek Gupta and Eleonora Mavroeidi, a broad agreement could increase gross domestic product by 0.6% and nearly double India’s exports of goods to the US — its largest market overseas, accounting for 19.3% of total exports — within a decade.
The economists said that textiles and light manufacturing goods are responsible for most of the export gains. Furniture, toys and other consumer goods are light manufacturing goods. For the domestic manufacturing sector, adding the trade deal would "mark an inflexion point".
India was among the first nations to initiate trade talks with the US. To appease the White House, Prime Minister Narendra Modi made concessions. On the agriculture sector, both US and India have hardened their stance.
Before a July 9 deadline for higher tariffs, Indian and US officials are racing to clinch a deal. China and Vietnam are facing hefty tariffs from the Trump administration. According to economists, a trade deal that levies 10% tariffs on India would make the South Asian nation a draw for businesses seeking to diversify their supply chain or to relocate.
The economists said that if India is subjected to higher reciprocal tariffs of 26%, India could lose more than a third of its direct exports to the US, and its GDP could take a 0.7% hit.
According to Mint, the in-person negotiations were initially supposed to run through June 27 but were extended by a day, raising hopes of an interim trade deal, said the people, who asked not to be identified as the discussions are private.
