According to a report by the State Bank of India (SBI), India should strengthen its production-linked encouragement (PLI) schemes in view of the growing global trade competition-especially after the announcement of mutual tariffs on several countries including India by US President Donald Trump. The report states that India has a strong opportunity to benefit from global change in trade, especially when the US is putting high tariffs on Chinese goods.
It recommended that the Government of India expand the existing PLI schemes in major areas like textile, engineering goods and gems and jewelery. The report suggests the coverage of the scheme to include more products and extend its duration by three more years. This will promote investment in domestic industries and help Indian products more competitive in the global market.
It states, “The Government of India should expand the existing production-linked incentives (PLI) schemes in these areas to cover the wide range of products and extend their duration to three years, which will promote investment and global competition of domestic industries.”
One of the major areas benefiting India is to the US. With increasing tariffs on Chinese goods, India can achieve a large market share in areas such as textiles, apparel and shoes. Additionally, India has the power of manufacturing in iron and steel products, which can also benefit from these trade changes.
However, the report also reported that the US has imposed a 26 percent tariff on Indian goods, while India has imposed a 15 percent tariff on American products. It states that this imbalance should be addressed through the ongoing trade talks between the two countries.
India is allegedly ready to significantly reduce tariffs on US goods worth more than US $ 23 billion sold in India as part of the Indo-US trade deal, which can help resolve the issue.
The report also mentions that countries such as China, Vietnam, Bangladesh and Indonesia can give an increase in Indian exporters. The expected changes in global supply chains may benefit India, which will open new opportunities for export growth. The areas affected due to change in tariffs include textile, engineering and gems and jewelery. Indian exporters should be prepared to avail these potential benefits and strengthen their position in global trade.
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