SBI report terms Tariffs bad business idea”, calls India’s economy robust

NEW DELHI, Aug 2: Indian economy is expected to remain unshaken by the imposition of steep US tariffs on its exports, according to the latest State Bank of India (SBI) report. SBI is an Indian multinational public sector bank and financial services body.
The report termed the imposition of 25 per cent tariff on India with penalty as a “Bad Business Decision” but the mysterious forces of Global Supply Chain should auto adjust and cushion the impact.
Moreover, the report said, “Indian businesses and firms would do well to reinvigorate the ‘Made in India’ as the hallmark of unquestionable Quality Not surprisingly, US GDP, Inflation, and currency face a greater risk of downgrades compared to India.”
“Though the US is India’s top exporter (20 per cent in FY25), India has diversified its export destinations and the top 10 countries only accounted for 53 per cent of exports,” the report added.
The SBI research report highlighted the sectoral prowess of chemicals, textiles, and AYUSH-based products that will continue to perform strongly due to competitive edge and market expansion efforts.
Pointing towards the government scheme, the report noted, ” Exports of smartphones and photovoltaic cells to the US have surged by the PLI scheme of the Government, and rationalization of GST on cut and polished diamonds has pushed gems and jewellery exports to the US. For the other product, it’s the robust demand from the US that led to higher exports.”
SBI research noted that India supplies nearly 47 per cent of the pharmaceutical needs to the US, and if the country shifts its manufacturing and API production to other countries, it might take 3-5 years, which can cause drug shortages and price hikes for the American citizens.
The report highlighted a slight impact on India’s pharma sector and stated, “As the US accounts for 40 per cent of India’s pharma exports, if the 25 per cent tariff continues, it may hit earnings of pharma companies by 2-8 per cent in FY26.”
In solar modules, India has been emerging as the prime destination of the US solar industry as imports from India to the US have increased massively in 2023 and crossed the mark of 8GW in 2024. The report noted, ” With this new tariff, products from India could become more expensive for US buyers. So Indian supply will become less attractive to US companies, and they may replace solar modules from tariff-free nations.”
The SBI report highlighted that the strong fundamentals of the Indian economy will come as a rescue in these trade tensions, and the country stands firmly in the long term due to sectoral robustness.
(UNI)