India appears set on hammering out a trade deal with the United States to avoid the impact of the tariffs President Donald Trump announced on Wednesday.
Reuters reported that India’s government decided against retaliating against the 26 percent tariff Trump imposed on its goods. The country’s government will focus on negotiations to reach a viable trade deal with the U.S.
Prime Minister Narendra Modi's administration has looked into a clause of Trump's tariff order that offers a possible reprieve for trading partners who "take significant steps to remedy non-reciprocal trade arrangements", said the official, who declined to be named as the details of the talks are confidential.
New Delhi sees an advantage in being one of the first nations to have started talks over a trade deal with Washington, and is better placed than Asian peers like China, Vietnam, and Indonesia, which have been hit by higher U.S. tariffs, a second government official said, also declining to be named.
In the days after Trump's tariff announcement that has shaken global markets to their core, India joined nations like Taiwan and Indonesia in ruling out counter tariffs, even as the European Commission prepares to hit U.S. products with extra duties following China's retaliation.
JUST IN: 🇮🇳🇺🇸 India seeks to negotiate new trade deal with the United States to avoid President Trump's tariffs. pic.twitter.com/thoQ1oxlEf
— BRICS News (@BRICSinfo) April 6, 2025
India could face severe consequences if it cannot reach a deal with the Trump administration. The tariffs “could slow India’s economic growth by 20-40 basis points in the ongoing financial year and may cripple India’s diamond industry, which ships more than a third of its exports to the U.S., putting at risk thousands of jobs,” Reuters noted.
“All options are up for negotiation, and both goods and services will be discussed,” during the imminent trade discussions, according to Bloomberg. New Delhi appears to favor a diplomatic approach instead of trying to antagonize the U.S.
Meanwhile, Indian businesses are bracing for the impact of Trump’s tariffs, according to NDTV.
The worst impact will be felt by the electronics, gems, and jewellery sectors, experts fear. But that impact will be limited and short-term because of the country's moderate share in global exports. The impact of the tariffs on competing economies is another aspect that may end up benefiting India, sources said.
If India becomes the first country to work out an agreement with the U.S., it could gain an advantage over its competitors, Vietnam and Indonesia. Vietnam’s General Secretary preliminarily agreed to eliminate duties on American imports during a phone call with President Trump. However, the actual negotiations have not yet started.
Sources told NDTV that so far, the U.S. has only sent officials to India to participate in trade discussions.
China, a major manufacturing hub that caters to the world, has retaliated to the Trump tariffs by imposing 34 per cent duty on the US. But India did not make any such move. This was a wise play that gives India an edge in trade talks, sources said.
They also pointed out that the US sent its officials only to India for negotiations on tariffs after Trump took office in January. India and US are now trying to expedite the bilateral trade agreement that will be mutually beneficial and will cover a range of issues including deepening supply chain integration, according to the Commerce Ministry.
If the negotiations succeed, India might become the first nation to officially alter its trade practices with the United States due to Trump’s tariffs.
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