India is on the verge of a major trade breakthrough. According to a research report released today by the State Bank of India (SBI), a new trade deal with the United States could propel India’s trade surplus beyond the $90 billion mark annually, creating an additional surplus of at least $45 billion per year.
The analysis, led by SBI Chief Economic Adviser Soumya Kanti Ghosh, suggests that this surge in export earnings—equivalent to 1.1 per cent of India’s GDP—could also generate foreign exchange savings of approximately $3 billion.
The Numbers Behind the Boom
India’s current trade surplus with the US stands at $40.9 billion. However, the SBI report indicates that this figure is poised to more than double.
“As per preliminary estimates, Indian exporters may raise exports of the top 15 items to the US by $97 billion in a year,” Ghosh stated. When other product categories are factored in, the potential increase in exports could “easily cross $100 billion,” he added.
This sharp uptick would not only solidify the United States’ position as India’s largest trading partner but also provide a significant cushion to the country’s current account deficit.
Macroeconomic Impact
The report underscores the macroeconomic significance of this shift. An additional surplus of $45 billion translates to 1.1 per cent of India’s GDP, a substantial contribution from a single bilateral trade channel. Furthermore, the consequent savings of $3 billion in foreign exchange reserves offer the Reserve Bank of India greater flexibility in managing currency volatility.
EU Textile Market: A Parallel Victory
In a related highlight, the SBI report drew attention to India’s recently finalised trade agreement with the European Union. The deal has opened the doors to the EU’s $260 billion textile market, granting Indian exporters zero-duty access. This is expected to provide a massive fillip to labour-intensive sectors and employment, particularly in traditional textile hubs such as Tiruppur, Ludhiana, and Surat.
Outlook
With the US account poised for record growth and the EU market now tariff-free, India is positioned to significantly expand its global trade footprint. Analysts suggest that the combined effect of these two trade corridors could redefine India’s export trajectory over the next decade.
The SBI report concludes on a cautiously optimistic note: while the potential is immense, realising
Leave Your Comment