SBI report urges India to expand PLI scheme as Trump announces reciprocal tariffs

One of the key areas where India stands to gain is in exports to the US.
| Photo Credit:
RUPAK DE CHOWDHURI

According to a report by the State Bank of India (SBI), India should strengthen its Production-Linked Incentive (PLI) schemes in light of growing global trade competitiveness, especially after US President Donald Trump announced reciprocal tariffs on several countries, including India.

The report stated that India has a strong opportunity to benefit from the global shift in trade, especially with the US imposing higher tariffs on Chinese goods. It recommended that the Indian government expand the current PLI schemes across key sectors like textiles, engineering goods and gems and jewellery. It suggests widening the coverage of the scheme to include more products and extending its duration by three more years.

This would help boost investments in domestic industries and make Indian products more competitive in the global market. It said, “The Indian government should expand existing Production Linked Incentive (PLI) schemes in these sectors to cover a wider range of products and extend their duration by 3 years, thereby bolstering domestic industries’ investment and global competitiveness.”

One of the key areas where India stands to gain is in exports to the US. With tariffs on Chinese goods going up, India can increase its market share in sectors such as textiles, apparel and footwear. Additionally, India has manufacturing strength in iron and steel products, which can also benefit from these trade changes.

However, the report also pointed out that the US has imposed a 26 per cent tariff on Indian goods, compared to India’s 15 per cent tariff on American products. This imbalance, it says, should be addressed through ongoing trade negotiations between the two countries.

India is reportedly willing to reduce tariffs significantly on over $23 billion worth of American goods sold in India as part of the India-US trade deal, which could help in resolving the issue. The report also mentioned that the reciprocal tariffs being imposed by the US on countries like China, Vietnam, Bangladesh and Indonesia could give Indian exporters an edge.

India may gain from the expected shift in global supply chains, opening up new opportunities for export growth. Sectors likely to be affected due to the changes in tariffs include textiles, engineering and gems and jewellery. Indian exporters must stay prepared to tap into the potential gains and strengthen their position in global trade.