As the crucial US tariff deadline approaches, Indian exporters walk a tightrope between apprehension and guarded optimism, while Washington and New Delhi rush to conclude a last-minute trade deal that would prevent the imposition of broad new tariffs.
The pressure is a result of US President Donald Trump’s April 2 ‘Liberation Day’ proclamation, in which he threatened to impose sharp tariff hikes on dozens of major trading partners, including India. Although that statement sent shockwaves around the world, Trump gave a temporary reprieve to facilitate negotiations — a reprieve that runs out next Wednesday.
Indian and US negotiators have had multiple rounds of talks since then to avoid imposing a 26% ‘reciprocal’ tariff on Indian products — a second tax in addition to a generalised 10% tariff already imposed on all nations. The White House insists the tariffs are needed to address what it deems ‘unfair’ trade deficits. India, far from being a manufacturing giant, recorded US $ 45.7 billion trade surplus with the US last year.
Major Indian exports — mainly from labour-intensive industries such as electronics, gems and jewellery and seafood — are now threatened with being priced out of the US market if the increased tariffs become effective.
Ajay Sahai, Director General of the Federation of Indian Export Organisations, told AFP that exporters are ‘optimistic’ India could reach a limited agreement, at least on trade. But he cautioned that the situation remains highly dynamic. “There’s a possibility the deadline could be pushed, given the constructive engagement between both sides,” he said. “The signals I’m getting point to encouraging developments — and we’re hopeful.”
On the US side, officials have also expressed optimism. Trump suggested on Tuesday that a deal might be imminent — though he hinted it would be unconventional. “It’s going to be a different kind of a deal,” he said. “India hasn’t really opened up — but if they do, we’re looking at far fewer tariffs.”
US Commerce Secretary Howard Lutnick substantiated that last month, stating that an agreement is possible in the ‘not too distant future’.
But in India, reports said that negotiators were still wrestling with many outstanding issues. India is seeking relief from current tariffs on steel and aluminium and increased access for exports like textiles and footwear — both vital to the nation’s employment market, an Indian Commerce Ministry official was quoted as saying to AFP.
Indian Finance Minister Nirmala Sitharaman, in conversation with The Financial Express last week, indicated that she was amenable to a compromise, referring to the possibility of an agreement as “a big, good, beautiful one.” However, she clearly put her foot down on agriculture and dairy, describing them as “very big red lines.”
Trade analysts feel a mini-deal is still on the cards. Ajay Srivastava, Co-founder of the Global Trade Research Initiative, said a narrow deal may include India reducing tariff levels on selected industrial goods and granting selective access to US farm exports — in return for the reversal of Trump’s planned 26% tariffs. But he cautioned that talks can fall apart if the US goes overboard on key agricultural matters or demands GMO access.
