India looks to support edgy exporters after Trump’s tariff blow

By Shruti Srivastava

India is looking to soothe frayed nerves of its exporters while simultaneously speeding up trade talks with the US, in an attempt to minimize the impact of Donald Trump’s tariffs on Asia’s third-largest economy. 

The South Asian country will hold virtual meetings on a bilateral trade agreement with the US this month, a government official told reporters in New Delhi on Thursday. India’s Ministry of Commerce and Industry has also asked exporters to assess the hit to their respective sectors following the tariff announcement, and will look for way to offer support, the official added, asking not to be identified citing rules. 

In a setback to Prime Minister Narendra Modi’s government, Trump on Wednesday slapped a 26% tariff on US imports from the South Asian nation. The levies come even though the two leaders have good personal ties and are in the midst of discussing a trade pact. Officials on both sides are looking to conclude the deal by fall this year. 

With the announcement of harsher-than-expected levies, exporters in India are ratcheting up pressure on New Delhi to seal the deal as quickly as possible. They have also asked New Delhi to extend an incentive under which the government refunds taxes paid by exporters during manufacturing and shipping. The Modi government introduced the initiative in 2021 to boost exports from India. 

“It would be helpful if the government extends the scheme for remission of duties and taxes on exported products which expires in September,” Ajay Sahai, director general of the Federation of Indian Export Organizations, said Friday. Predictability on that front would help exporters decide future contracts, Sahai said.

Industry experts said exports of engineering goods — which is India’s biggest category of exports to the US and includes products like auto parts, power equipment and industrial machinery — would fall between $4 billion to $5 billion in the first year. The gems and jewelry sector, another major category of exports, is also expected to take a significant hit. 

“In short run, we anticipate challenges in sustaining India’s current export volume of $10 billion to the US market,” the Gem & Jewellery Export Promotion Council said in a statement Thursday. A bilateral trade deal “would be crucial in navigating the tariff issues and securing longterm interest of the sector,” it added. 

In virtual meetings this month, New Delhi and Washington will negotiate duty concessions and market access in various sectors, the Indian official said on Thursday, adding that the government, for now, would try to forge deeper trade ties with the Trump administration. 

The Modi government has already made several concessions to Trump on his trade and immigration agenda, and the two sides pledged to boost bilateral trade to $500 billion by 2030, up from $127 billion in 2023.