The US decision to impose 25% tariffs will have minimal effect on India, sources told PTI. India is clear that duty exemptions for agricultural, dairy and genetically modified (GM) products in trade agreements is a no-go area, the report said, quoting sources.
Negotiations between New Delhi and the US regarding the trade deal are ongoing. The US delegation is scheduled to visit India on August 25 for the sixth round of discussions.
In the fiscal year 2024-25, trade between India and the US reached $131.8 billion, which includes $86.5 billion in exports and $45.3 billion in imports.
A significant portion of Indian exports, including pharmaceutical and electronic items, already fall under the US exemption category and therefore would not incur duties, sources told PTI.
"More than half of India's exports to the US (are expected) to remain unimpacted. Due to the Section 232 exemption of the US, only exports worth about $40 billion would be impacted with these tariffs," they added.
Several sectors would face a 25% duty impact, including electrical and mechanical machinery (approximately $9 billion), gems and jewellery ($12 billion), shrimp ($2.24 billion), textiles/clothing ($10.3 billion), leather and footwear ($1.18 billion), animal products ($2 billion), chemicals (2.34 billion).
"More than half of India's exports to the US will not be impacted by the duty. Due to the Section 232 exemption of the US, only exports worth about $48 billion would be impacted with these tariffs," they said, adding that the remaining exports will have a little impact on a country with a GDP of about $4 trillion and a consumer base of 140 crore.
India-US Trade Deal: Why Agri & Dairy Are Sticky Points
Officials highlighted concerns regarding the US dairy sector's use of animal feed, noting that India has consistently refrained from offering duty concessions in this sector across all its trade agreements.
"There are religious sentiments in the dairy sector. So, it is not acceptable. There will be no compromise on these segments in any of India's trade pacts," they said, according to the report.
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Donald Trump tariff impact? State-run oil refiners stop Russia crude oil purchases in spot market; government says no instructions givenBilateral trade negotiations between India and the US started in March, with five rounds of discussions completed thus far.
The next round of discussions, marking the sixth set of talks, is scheduled for August-end.
US Tariffs on India
US President Donald Trump on Wednesday announced a 25% tariff rate for India, while saying that an additional penalty will also be imposed for India’s purchase of Russian oil and arms. The exact nature of the penalty is yet unclear.
According to Donald Trump administration officials, the American President is ‘frustrated’ with India’s stance in the trade talks. They also said that India’s extensive purchase of crude oil from Russia is also a point of ‘irritation’.
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Donald Trump’s 25% tariff, ‘dead economy’ jibe: India sends clear message to the US in 5 points - what Piyush Goyal saidTrump has called India and Russia ‘dead economies’. “I don’t care what India does with Russia. They can take their dead economies down together, for all I care. We have done very little business with India, their Tariffs are too high, among the highest in the World. Likewise, Russia and the USA do almost no business together….,” Trump posted on social media platform Truth Social yesterday.
Experts widely view Trump’s tariff move as a pressure tactic to get India to agree to US terms.
In response to Trump’s tariff announcement, Commerce minister Piyush Goyal told the Parliament that India will keep its national interest as a priority in any trade deal. He also highlighted that India is the world’s fastest growing major economy, seen as a bright spot by economists and institutions.
“We have risen from the 11th largest economy to one of the top 5 economies driven by our reforms, hard work of our farmers, MSMEs, and entrepreneurs. It is also widely expected that we will become the third largest economy in a few years,” he said.
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‘India has not been a great global actor’: Donald Trump administration fires fresh salvo after 25% tariff; says Russia oil ‘most certainly a point of irritation’
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