India Adopts a Cautious Approach Amid New US Tariff Measures

India is adopting a cautious approach to the US's new import tariffs of 11%–49% on 60 countries, including India, effective April 9. Officials see both challenges and opportunities, as competitors like China and Vietnam face steeper duties. While sectors like shrimp and carpets may struggle, pharmaceuticals and electronics could benefit. The US remains India's largest trading partner, with a $35.32 billion trade surplus in 2023-24. India is monitoring the situation, engaging stakeholders, and emphasizing strategic adaptability to navigate global trade shifts.

India is taking a measured stance in response to the United States' recent decision to impose additional import duties on goods from several countries, including India. Rather than rushing into countermeasures, Indian officials are opting to observe the unfolding situation, citing potential opportunities alongside challenges, according to government sources.

On April 2, US President Donald Trump announced new reciprocal tariffs ranging from 11% to 49% on imports from approximately 60 countries, with the measures set to take effect on April 9. These tariffs aim to reduce the US trade deficit and encourage domestic manufacturing, but the move has sparked concerns globally.

A Balanced Perspective

Indian officials believe the situation presents a mix of hurdles and potential advantages. Many of India's export competitors, such as China, Vietnam, Bangladesh, Cambodia, and Thailand, face steeper duties under the new rules. This could open doors for Indian exporters in certain sectors.

One government source emphasized the importance of patience, noting, "This is an unprecedented move, and even US industries could face challenges from these tariffs. We need to observe the developments carefully and avoid jumping to conclusions about their long-term impact."

While some Indian industries, such as shrimp and carpet exporters, may encounter difficulties due to the higher 27% tariff on specific goods, other sectors like pharmaceuticals and electronics could benefit. Competitors in these industries face even higher tariff rates, potentially giving Indian exporters a competitive edge.

Trade Dynamics with the US

The United States has been India's largest trading partner in recent years, accounting for 18% of India's total goods exports and 10.73% of bilateral trade in 2023-24. India enjoyed a $35.32 billion trade surplus with the US during this period, a significant increase compared to previous years.

India's key exports to the US include drug formulations, telecom instruments, precious stones, petroleum products, gold jewelry, cotton garments, and iron and steel products. Meanwhile, India's imports from the US primarily consist of crude oil, petroleum products, coal, diamonds, electric machinery, and aerospace components.

Sectoral Implications

Some Indian exports, particularly price-sensitive goods like gold jewelry and carpets, may feel the pinch of the increased duties. However, commodities such as rice, which faces a 27% tariff but remains competitive against exports from Vietnam and Thailand, continue to hold an advantage.

India's seafood and processed food exports to the US, valued at 2.58billionand2.58 billion and 2.58billionand1.03 billion respectively in 2024, are likely to sustain demand due to their appeal among the Indian diaspora in America. Similarly, agricultural exports, including cereals, fruits, vegetables, and spices, which stood at $1.91 billion last year, remain resilient despite the tariff hikes.

Dairy products, edible oils, and alcohol exports from India, though smaller in scale, also contribute to the trade landscape.

Monitoring and Engagement

India’s commerce ministry is actively assessing the implications of the US tariff measures. Officials are engaging with stakeholders and coordinating with line ministries to evaluate the potential impact across various sectors.

Trade experts suggest that the steep 54% tariffs imposed on Chinese goods could lead to an influx of Chinese products in India, raising concerns over potential market disruptions.

India is carefully watching how the situation unfolds, with officials emphasizing a strategic and calculated approach. As one source concluded, "The global trade environment is shifting, and India must navigate it thoughtfully to safeguard its interests while seizing emerging opportunities."