India has emerged with a clear tariff advantage over several competing export economies after New Delhi and Washington announced a trade deal on February 2, lowering tariffs on Indian goods to 18%. India now faces the lowest US tariffs among all emerging markets after South Korea. The move places India below or on par with most South and Southeast Asian peers, improving its relative cost competitiveness in key global markets.
Prime Minister Narendra Modi welcomed the announcement, calling it a boost for domestic manufacturing. “Delighted that Made in India products will now have a reduced tariff of 18%,” Modi said in a post on social media platform X, thanking US President Donald Trump for the decision.
Lower Than Most Regional Peers
At 18%, India’s tariff rate is now lower than several major export-oriented economies in Asia. Bangladesh, Sri Lanka, Taiwan and Vietnam face tariffs of 20%, while Indonesia, Malaysia, Thailand, the Philippines and Pakistan are levied 19%. Cambodia also faces a higher tariff burden at 19%.
Among South Asian economies, India’s positioning is particularly significant. While Afghanistan faces a lower tariff of 15%, its limited manufacturing depth and small export base mean it is not a meaningful competitor. Pakistan, India’s closest rival in textiles and select manufacturing segments, faces a marginally higher 19% tariff, putting Indian exporters at a relative advantage.
