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India Must Boost Manufacturing Post-US Trade Deal With Reforms: Report

Following the interim US-India trade agreement, a report by Systematix Group argues India must prioritize structural reforms to strengthen its manufacturing base. It recommends correcting duty structures, streamlining logistics, and reducing protectionism to integrate into global value chains. The deal itself provides tariff relief on key exports like textiles and pharmaceuticals, while removing duties on aircraft parts. The report concludes that the deal's full benefits hinge on India pursuing deeper reforms and aligning its manufacturing with global standards.

Key Points: India-US Trade Deal: Report Urges Reforms for Manufacturing

  • Correct inverted duty structures
  • Streamline logistics and customs
  • Reduce protectionism and expand FTAs
  • Boost R&D and ease land/labour constraints
2 min read

India should prioritise trade openness, reforms to strengthen manufacturing base after interim trade deal with US: Report

A report advises India to focus on trade openness and structural reforms to strengthen manufacturing after the interim trade deal with the US.

"As the India and US have now agreed on an interim trade deal, India should now focus on India must prioritize trade openness and reforms - Systematix Group Report"

New Delhi, February 9

Following the agreement on an interim trade deal between India and the United States, India must now focus on trade openness and structural reforms to strengthen its manufacturing base and global competitiveness, according to a report by Systematix Group.

The report noted that India should prioritise correcting inverted duty structures, streamlining logistics and customs processes to reduce input costs, and fostering assembly-based manufacturing to achieve scale and generate employment.

It further emphasised the need to reduce protectionism, expand free trade agreements (FTAs), boost research and development, and ease constraints related to land, labour, and skills.

It stated, "As the India and US have now agreed on an interim trade deal, India should now focus on India must prioritize trade openness and reforms".

According to the report, this integrated reform approach would help discipline domestic firms through advanced manufacturing practices and embed India more deeply into global value chains (GVCs).

Such measures could raise India's manufacturing share and global standing, while also mitigating risks linked to what the report described as "Trump's bargain," and unlocking long-term competitiveness.

The interim US-India Bilateral Trade Agreement, declared on February 7th, establishes an interim framework tied to a broader Bilateral Trade Agreement (BTA) that was initiated in 2025.

Under the interim arrangement, the US has set a reciprocal tariff rate of 18 per cent on select Indian goods, including textiles, apparel, leather, plastics, chemicals, and machinery.

The report highlighted that the framework also outlines plans to remove tariffs on several key items, such as generic pharmaceuticals, gems, diamonds, and aircraft parts, subject to the successful implementation of the interim agreement.

From India's perspective, the deal offers meaningful tariff relief by reducing effective US duties on Indian exports to 18 per cent. This is expected to improve the competitiveness of Indian products in the US market and provide exporters with greater pricing flexibility.

The report further noted that the removal of national-security tariffs on Indian aircraft and aircraft parts is a significant positive for the aviation sector. In addition, the provision of a preferential quota for automotive parts is expected to support manufacturing growth and strengthen India's position in global supply chains.

Overall, the report concluded that while the interim trade deal provides near-term relief and opportunities, its full benefits will depend on India's ability to pursue deeper reforms, expand trade integration, and align its manufacturing strategy with global standards.

- ANI

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Reader Comments

P
Priya S
While trade openness is important, we must be careful. Reducing protectionism too quickly can hurt our small and medium enterprises. The government needs a balanced approach—support local manufacturing while integrating into global chains. The aviation and auto parts focus is promising though.
R
Rohit P
Finally, some sense! The inverted duty structure correction is long overdue. It makes no sense that finished goods are cheaper to import than raw materials. This deal is an opportunity, but as the report says, execution on reforms is everything. Hope they move fast on land and labour laws.
S
Sarah B
Interesting analysis. From an outside perspective, India's manufacturing potential is huge but often held back by bureaucracy. "Trump's bargain" is a real risk—the US can be unpredictable. Embedding deeper into GVCs is the smartest way to ensure long-term stability and growth for Indian industry.
K
Karthik V
Good report, but it misses the skill development angle. We can have all the trade deals and reforms, but without a skilled workforce for advanced manufacturing, we'll just be doing assembly work. Need massive investment in vocational training and R&D, as the report briefly mentions.
M
Meera T
The focus on gems, diamonds, and pharma is excellent—these are sectors where we already have strength. Leveraging the deal to move up the value chain in these areas can create high-quality jobs. Hope state governments also get on board with the reform agenda.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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