India unlikely to retaliate against Trump's tariffs as deal talks progress

New Delhi: India does not plan to retaliate against US President Donald Trump's 26 per cent tariff on imports from the Asian nation, an Indian government official said, citing ongoing talks for a deal between the countries.

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 US 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 US products with extra duties following China's retaliation.

India and the US agreed in February to clinch an early trade deal by autumn 2025 to resolve their standoff on tariffs.

The Indian prime minister's office did not immediately respond to an e-mailed request for comment.

Reuters reported last month that New Delhi is open to cutting tariffs on US imports worth $23 billion.

Modi's administration has taken a number of steps to win over Trump, including lowering tariffs on high-end bikes and bourbon, and dropping a tax on digital services that affected US tech giants.

Trump's 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 US, putting at risk thousands of jobs.