India’s robust domestic economy and a smaller-than-anticipated fall in exports are giving New Delhi greater flexibility in negotiations with Washington, despite U.S. tariffs of up to 50% on Indian goods, according to officials and analysts.
Indian exports to the United States fell 8.6% year-on-year to US $ 6.3 billion in October, marking the second month under the higher tariff regime. The decline was less severe than the 12% drop recorded in September, suggesting the impact may be stabilising.
Trade negotiations between the two countries have progressed slowly, even as other Asian economies such as Japan and South Korea have secured agreements to lower US duties. Indian officials have repeatedly stated that New Delhi will not be pressured into a rushed deal.
While some sectors, particularly textiles, had seen reduced orders, the broader economic effects remained contained, giving negotiators room to pursue a balanced agreement.
Sources familiar with the talks said Washington is expected to withdraw the 25% tariff imposed in connection with India’s purchases of Russian oil, with discussions likely to move towards a 15% uniform tariff rate. In return, New Delhi is prepared to lower import duties on more than 80% of goods while safeguarding sensitive sectors such as agriculture.
Officials said the government is supporting exporters through new trade agreements with the UK, UAE and Australia, reductions in raw-material duties, and a US $ 5.1 billion package aimed at bolstering export sectors. Exporters have also mitigated the decline in US shipments by expanding into African and European markets and retaining American clients through discounts and extended delivery windows.
Apparel and footwear manufacturers are absorbing costs of up to 20% to hold onto US buyers, according to Ajay Sahai, Director General of the Federation of Indian Export Organisations. Targeted relief measures from the government and central bank, including short-term loan moratoriums, have helped maintain liquidity, though officials have avoided large-scale fiscal interventions.
Trade associations added that domestic demand is strengthening following tax cuts on hundreds of consumer items, which in turn is supporting export competitiveness. Reductions in duties on inputs such as man-made fibres have further aided textile exporters.
Garment exporters are currently offering discounts of 10–20%, depending on garment style and shipment volume, said N. Thirukkumaran, General Secretary of the Tirupur Exporters’ Association.
India’s economy grew 7% year-on-year in the July–September quarter and is projected to expand 6.8% in the current financial year, according to the central bank—momentum that analysts say is helping cushion the impact of U.S. tariffs and strengthen India’s negotiating position.
