“India is very, very hard. The Prime Minister just left and was my good friend, but you are not treating us correctly. They charge us 52% and we barely charge.”
The new tariffs are part of the two-tier plan. The base rate for all imported goods in the United States was a 10% baseline tariff effective April 5, citing security issues related to the trade deficit. Starting from April 9, higher tariffs apply to specific countries and products, including Indian goods.
Prior to the announcement, the Ministry of Industry and Commerce of India has been evaluating various situations to manage possible impacts. The ministry reportedly consulted with domestic industries and reviewed tariff imbalances and non-tariff barriers that affected India’s exports to the United States
A Reuters report pointed out that India said it was ready to cut tariffs on 50% of US imports worth $23 billion, an important gesture of recent trade diplomacy.
In 2024, bilateral trade between the two countries will be US$124 billion. India exports $81 billion worth of goods to the United States, while imports amount to $44 billion, giving India’s trade surplus of $37 billion.
How will tariffs affect India?
India is not expected to face serious economic setbacks. A report by Bernstein pointed out that India may focus on negotiations rather than retaliation. It is expected to decline in the short term and then recovered in the second half of the year. PhD Business Industry (PHDCCI) estimates that tariffs will result in a short-term impact on GDP by 0.1%. “India’s strong domestic manufacturing and ongoing government support through the PLI program, Made in India and Atmanirbhar Bharat will help maintain the country’s economic resilience,” said Hemant Jain, president of PHDCCI.
Assocham President Sanjay Nayar added that India’s introvert economy provides a buffer to make it less visible compared to other Asian markets.
Departmental Impact: Mixed Signal
The broader trade shift opens up challenges and opportunities. Indian exports of steel, aluminum and automotive components are now facing a 25% tariff, according to Ajay Srivastava, founder of the Global Trade Research Project (GTRI). However, products such as medicines, copper, energy and semiconductors are excluded.
The Indian Electronics and Semiconductor Association (IESA) welcomes exemptions to semiconductors for its key role in global supply chains. Despite this, the body still admits that the United States remains India’s highest export market, making the new duty a major concern.
Possible industries
Despite the high tariffs, some Indian sectors may benefit. India’s Cellular Electronics Association (ICEA) reports that India has a stronger position in the electronic export space than countries such as China, Vietnam and Thailand. ICEA attributes the results to “the extraordinary and ruthless efforts of our negotiators and leaders.”
Now, China faces a maximum tax on electronic exports at 79%, while Vietnam has a 46% increase. In contrast, India’s lower interest rates have enhanced its near-term competitiveness.
India’s textile industry is likely to improve. The United States remains the main destination for Indian textiles, with the industry’s $36 billion exports accounting for nearly $10 billion during the 2023-24 period. Industry analysts say the new tariff pattern could prompt our buyers to move their purchases from countries such as Vietnam, Bangladesh and China to India.
Agricultural exports, especially seafood and rice, are also expected to remain stable. Agricultural economist Ashok Gulati told PTI that India has tariff advantages, especially in shrimp exports, which constitutes a small part of U.S. food spending. “Demand is unlikely to drop significantly,” he said, adding that India could gain an advantage over other suppliers.
While tariffs present new challenges, India’s strategic positioning, diversified manufacturing bases, and active trade diplomacy show that the country can navigate this stage without significant disruption. A senior government official summed it up to PTI: “It’s a mixed bag, not a setback in India.”
