After the Donald Trump administration imposed a 26% charge on Indian exports, a senior official confirmed that India might not impose counter-tariffs on the US and will concentrate on completing the bilateral trade agreement as soon as possible. Understandably, the uncertainty impacted the markets, with the Sensex dropping to 1.6%.
China (34%), Vietnam (46%), and Indonesia (32%) are also hit by higher tariffs.
According to reports, the government is relying on a clause that offers a breather to nations who take “significant steps to remedy non-reciprocal trade arrangements”.
Another government told media outlets that India was taking solace in being one of the first nations to initiate talks on a trade deal with the US.
Indonesia declared it would not respond, despite China’s announcement that it will apply reciprocal 34% tariffs on all US imports starting on April 10. In a possible trade agreement, Vietnam, a growing export and manufacturing substitute for China, has committed to lowering its tariffs to zero.
The good news for India is that US tariffs do not apply to copper, semiconductors, or pharmaceuticals. Almost half of the generic medications sold in the United States are sourced from India. However, exports in important industries like jewellery, stones, electronics, and auto parts can suffer. India has responded to the tariffs cautiously, but the opposition has criticized the government for not receiving a reprieve despite PM Modi and Trump’s “camaraderie.”
Significant work has been made on the proposed Bilateral Trade Agreement (BTA) with the United States.
In addition to potentially crippling India’s diamond industry, which ships over one-third of its exports to the United States, Trump’s tariffs might impede India’s economic growth by 20–40 basis points in the current fiscal year, endangering thousands of jobs.
