Rising protectionism could benefit India, says S&P Global
This story was originally published at 19:03 IST on 19 May 2025
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NEW DELHI – India is likely to benefit from increasing protectionism in trade around the world even as spillovers from heightened global uncertainty may affect near-term growth in the world's fastest expanding large economy, S&P Global said in a report Monday.
The effects of manufacturing reshoring and trade regionalisation strategies could add around 130 basis points to India's real GDP by the end of the financial year 2034-35 (Apr-Mar), S&P Global said, adding that the country's real GDP growth is expected to average 5.7% over the next decade. India is also on track to become the world's third-largest economy by FY31, S&P Global added.
"India is not immune to the ongoing shift in global trade and tariff policies towards protectionism despite a moderate dependence on external trade for growth," S&P Global's India Research Chapter said in the ‘India Forward: Transformative Perspectives' report. "Private corporate investment may be particularly vulnerable to prolonged policy uncertainty."
Global trade uncertainty has increased in recent months, particularly after the US in April imposed reciprocal tariffs on its trade partners. The tariffs were later paused. The US levied 26% tariff on the import of goods from India, now suspended till Jul. 9.
"The threat of higher US tariffs on several Asian economies, including mainland China, Vietnam, Taiwan, Thailand and Bangladesh, could be leveraged to India's advantage to accelerate its manufacturing growth and increase its share in global exports," according to S&P Global's report.
Manufacturing value added accounts for a modest 17.2% of India GDP, against the government's target of 25%. To raise manufacturing's share in GDP, the government has implemented schemes such as the production-linked incentives to build domestic manufacturing capacity. End
Reported by Shubham Rana
Edited by Rajeev Pai
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