Government’s Response to Imminent Tariff Challenges
As the deadline for the US reciprocal tariffs on India approaches on April 2, the Indian government is actively exploring strategies to mitigate potential economic repercussions. Reports indicate that policymakers are contemplating reductions in import tariffs on key US goods as part of broader efforts to maintain stable trade relations.
Commerce and Industry Minister Piyush Goyal is currently in Washington, engaging in discussions regarding a possible bilateral trade agreement (BTA). Both nations are aiming to finalize a deal by the end of the year, with a long-term objective of expanding bilateral trade to $500 billion by 2030.
According to market analysts, India is taking a diplomatic approach by focusing on trade negotiations rather than retaliatory measures. Experts suggest that this strategy could encourage the US administration to consider selective trade agreements instead of imposing broad-based US Reciprocal Tariffs. While this approach is seen as beneficial for both countries, risks such as currency fluctuations and potential dumping of goods remain concerns that require close monitoring.
Key Sectors Bracing for Impact
Several Indian industries, including auto components, consumer electronics, jewelry, and apparel, are assessing strategies to mitigate risks associated with the upcoming US Reciprocal Tariffs. According to industry sources, the government is evaluating a reduction in the current 15-16% duty on smartphone imports from the US. Given that India imports only a small volume of smartphones from the US, this move is expected to have minimal financial downside while strengthening trade relations.
India’s electronics exports to the US reached $10 billion in the fiscal year 2024, with smartphones comprising a significant portion of this trade. The US is also the largest destination for Indian auto component exports, valued at $6.79 billion and accounting for 27% of total shipments. The pharmaceutical sector is advocating for the removal of the existing 10% duty on US drug imports, pointing out that the US does not impose tariffs on Indian pharmaceutical products.
Industry leaders have highlighted the necessity of adapting policies to maintain competitiveness in global markets. The Economic Times reported that Indian exporters are engaging in dialogues with their American counterparts to ensure continuity in trade, with the IT and commerce ministries leading efforts to reevaluate US Reciprocal Tariffs and streamline import duties.
Trade Policy Adjustments Under Consideration
India is also weighing potential tariff reductions on key US agricultural products, including walnuts, almonds, apples, and cranberries—items that have been on Washington’s trade agenda for years. Current US Reciprocal Tariffs on these goods range from 42% to 120%, and potential adjustments could serve as a goodwill gesture to ease trade tensions.
Meanwhile, the textile and apparel sectors are preparing strategies to sustain trade volumes. Exporters are planning discussions with US buyers following Minister Goyal’s visit to Washington. Additionally, the Gem & Jewellery Export Promotion Council (GJEPC) is sending a delegation to the US to engage with key stakeholders, including De Beers and Tiffany & Co., as India remains a major supplier of America’s gem and jewelry imports.
With the tariff deadline looming, both governments and industries are ramping up efforts to ensure that trade disruptions are minimized while maintaining strong economic ties.
