India-US Tariffs
India’s ability to withstand recent tariff shocks from the United States is reshaping the dynamics of ongoing trade negotiations. Despite Washington’s duties climbing as high as 50 per cent on Indian imports, the country’s solid domestic momentum and smaller-than-expected export slump are giving New Delhi room to negotiate from a position of confidence, according to a Reuters report citing officials and industry experts.
Even with elevated tariffs in place for two consecutive months, India’s exports to the US fell only 8.6 per cent year-on-year in October, easing from the 12 per cent decline recorded in September. The moderated drop has encouraged negotiators to stay the course, claims the report.
Indian representatives have repeatedly stated publicly that they will not rush into an agreement simply to match recent deals secured by Japan and South Korea, states the report.
“For now, we’ve avoided the worst impact of the 50 per cent US tariffs,” said a senior government official aware of the talks, noting that certain segments, particularly textiles, have faced pressure, but the overall strain on the economy remains manageable. The official added, “If needed, we are ready to wait,” underscoring New Delhi’s strategy of patience, claims the Reuters report.
Paths Toward A Balanced Deal
Officials familiar with the discussions stated in the report that expect the US to eventually reverse the 25 per cent tariff associated with Russian oil purchases and move toward a consolidated 15 per cent duty. The Indian Government, in turn, is prepared to reduce import tariffs on more than 80 per cent of goods while safeguarding vulnerable areas such as agriculture.
Although neither the Indian nor the US government offered immediate comment, recent statements from President Donald Trump suggested that a broader economic and security agreement is within reach, states the report.
Exporters Adapt As Pressure Mounts
To blunt the tariff impact, exporters are widening their market reach through the government’s new trade pacts with the UK, UAE and Australia, while also benefiting from tax reductions on inputs and a $5.1 billion support package. Many firms have held on to US buyers by offering discounts and extending delivery times. Apparel and footwear producers are absorbing up to 20 per cent in costs to stay competitive, according to Ajay Sahai of the Federation of Indian Export Organisations, as per the Reuters report.
Targeted relief steps, such as short-term loan moratoriums and domestic tax cuts, have also bolstered demand. For exporters of textiles, lower duties on materials like man-made fibres have provided timely support. N Thirukkumaran of the Tirupur Exporters’ Association noted that companies are offering 10–20 per cent discounts depending on style and shipment size, states the report.
Competition From China Intensifies
Despite these measures, exporters warn of mounting challenges beyond the US market. Excess production in China is spilling into global trade channels, pushing down prices and intensifying competition. “Chinese businesses are well-entrenched and their domestic situation has made them highly competitive,” said Rahul Tikoo, CEO of Optime, said the report.
India’s exports to non-US destinations fell 12.5 per cent in October, driven by weaker engineering, petroleum and jewellery shipments. HSBC economist Pranjul Bhandari suggested that this trend may reflect heightened global competition as countries diversify trade flows in response to shifting tariffs.