India seeks trade deal with US to offset Trump’s tariffs

India is working to calm its exporters and accelerate trade negotiations with the United States after Donald Trump announced steep tariffs on Indian goods. In a recent development, Trump imposed a 26% tariff on imports from India, despite ongoing talks for a trade pact and reportedly strong personal ties with Prime Minister Narendra Modi. 

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To address this setback, India plans to hold virtual meetings with the US this month to push forward the proposed bilateral trade agreement. A government official stated that the Ministry of Commerce and Industry has asked Indian exporters to evaluate the impact of the new tariffs on their sectors. The government is also exploring ways to support affected industries. 

Exporters are urging the Modi administration to extend a key incentive scheme that refunds taxes paid during the manufacturing and shipping process. Introduced in 2021, the scheme is set to expire in September. They feel that extending the scheme would provide stability and help businesses plan future contracts. 

The impact is expected to be significant, particularly in sectors like engineering goods which include auto parts and industrial machinery and gems and jewelry. Engineering exports to the US could drop by $4-5 billion in the first year, while the jewelry sector anticipates a major decline as well. The Gem and Jewellery Export Promotion Council stressed the urgent need for a trade agreement to protect long-term interests. 

In the upcoming discussions, both countries will negotiate tariff relaxations and greater market access across various sectors. India, which has already made concessions on trade and immigration aims to strengthen ties and work towards a $500 billion bilateral trade goal by 2030 up from $127 billion in 2023.