Nearly $2.6 billion worth of South Asian exports to the United States could come under pressure once the India–US trade deal comes into force, as Indian exporters gain a decisive tariff advantage over regional peers, a Moneycontrol analysis shows.
Pakistan, Sri Lanka and Bangladesh together risk losing competitiveness in over a tenth of their exports to the US in product categories where India is either already exporting at least 20 percent more, or where the gap between Indian exports and those of its neighbours is within 30 percent.
The shift follows the announcement by US President Donald Trump on February 2 of a trade agreement with India that cut reciprocal tariffs to 18 percent from the earlier 50 percent. The deal significantly alters India’s relative standing in the US market, placing it below most South Asian—and several Southeast Asian—economies in terms of tariff burden.
While the headline tariff rate for Indian goods now stands at 18 percent, competitiveness is shaped more by the trade-weighted average tariff across export categories. After the deal, India’s effective tariff falls to 10.7 percent, well below Bangladesh’s 19.9 percent, Sri Lanka’s 19.1 percent and Pakistan’s 18.2 percent. Indonesia’s trade-weighted rate is estimated at 16 percent, while Vietnam faces 12.5 percent. India’s tariff level is now broadly comparable with Thailand at 10.6 percent and the Philippines at 10.5 percent, and comfortably lower than most of its South Asian rivals.
