The US may reduce tariffs on India from 25% to 10-15%. This will provide relief to the textile, chemical, and jewelry sectors. A decision on the trade deal is possible in 8-10 weeks.
Trump Tariff: Trade relations between India and the United States appear to be moving in a new direction. The US administration is preparing to soon remove the 25% Penalty Tariff imposed on Indian products and reduce the Reciprocal Tariff to 10-15%. If this happens, it will prove to be a double relief for Indian exporters, and a significant surge in demand for Indian products in the US is expected.
Major Statement by Government's Chief Economic Adviser
India's Chief Economic Adviser (CEA) V. Anantha Nageswaran stated that the US might soon remove the additional tariffs imposed on Indian goods. Additionally, the Reciprocal Tariff, currently at 25%, could be brought down to between 10 and 15%. Nageswaran expressed hope that this issue would be resolved in the next 8-10 weeks, strengthening trade relations between India and the US.
Trade Deal Discussions Underway
Discussions regarding a Trade Agreement have been ongoing between New Delhi and Washington for a long time. Recently, representatives from both countries held talks in Delhi for approximately 7 hours. Although these discussions were not official, positive signals were received from both sides. It is hoped that a major announcement regarding the India-US Trade Deal could be made by the end of this year or in the next few months.
Which Sectors Were Most Affected
The US is India's largest export market, and approximately 55% of India's exports are bearing the brunt of high tariffs. These include several key sectors:
- Textile Industry
- Chemicals
- Seafood
- Gems & Jewellery
- Machinery
The high tariffs imposed on these sectors have significantly impacted India's exports in recent months. In August, India's exports to the US fell to $6.87 billion, the lowest level in the past 10 months.
US is India's Largest Export Market
Approximately 20% of India's exports go to the US. In Financial Year 2024-25, India exported goods worth $86.51 billion to the US and recorded a trade surplus of $40.82 billion.
If the US reduces tariffs and removes the Penalty Tariff, Indian exporters will receive significant relief. This will not only boost India's economy but also strengthen bilateral trade relations between the two countries.
Trump Explained Reason for Tariffs on India
US President Donald Trump recently stated at a press conference with British Prime Minister Keir Starmer why he imposed tariffs on India.
Trump said he devised a strategy on global oil prices to end the Russia-Ukraine war. He believes that if global oil prices fall, Russia will be forced to compromise. It was under this strategy that he imposed tariffs on India.
Trump and Modi's Relationship
However, Trump also stated that he is very close to India and has an excellent relationship with Prime Minister Narendra Modi. He called PM Modi to wish him on his birthday and said that relations between the two countries are at a very good level.
Benefits for India
If the US truly reduces tariffs to 10-15%, India will benefit in several ways:
- Increased Exports – Indian products will become cheaper in the US, and their demand will rise.
- Employment Opportunities – New jobs will be created for those working in the export industry.
- Market Stability – Long-standing tariff disputes will end, and the business climate will improve.
- Strengthened Bilateral Relations – The trade partnership between the US and India will deepen.
