Government is consulting exporters as it prepares for the next round of trade negotiations, with 25% reciprocal tariffs anticipated to take effect soon
Indian exporters have outlined their demands ahead of the upcoming India-US Bilateral Trade Agreement (BTA) negotiations, focusing on the removal or reduction of tariffs and non-tariff barriers affecting Indian goods. The negotiations, stalled due to America's demands for market access for a large number of items, including agriculture, are scheduled to resume on August 25 with the US negotiating team's visit to India.
India is particularly seeking the immediate elimination of the 25% additional tariffs imposed on Indian imports from August 1. Additionally, the country is pushing for cuts in US tariffs on steel and aluminium (currently 50%), tariff reductions in the auto sector (currently 25%), and lower tariffs on labour-intensive sectors such as textiles, gems and jewellery, leather goods, garments, plastics, chemicals, shrimp, oil seeds, grapes, and bananas.
The Indian government is working with exporters to finetune its list of demands on both tariff and non-tariff barriers that the US could address for better market access. The Indian government is in fresh consultations with the industry for inputs for the next round of negotiations on the India-US BTA.
Regarding non-tariff barriers, India opposes what it terms as “the most strenuous and obnoxious non-monetary trade barriers” imposed by the US, which complicate market access and exports. The uncertainty over an unspecified penalty for buying oil and arms from Russia is a priority concern for the exporters.
The US intends to impose, along with the 25% tariff on Indian goods, an unspecified penalty as a punitive measure for India’s continued purchase of Russian crude oil and weapons despite sanctions against Russia. This uncertainty causes anxiety among Indian exporters and policymakers because it adds an unpredictable layer of trade risk and complicates negotiations given India’s strategic defense and energy partnerships with Russia.
Exporters have also requested incentives from the government to export to the US, including the re-introduction of the Merchandise Export from India Scheme (MEIS). They have sought enhanced rates under existing schemes like Remission of Duties and Taxes on Exported Products (RoDTEP) and the early resumption of the interest equalisation scheme with higher interest subsidy.
The lack of clarity on the penalty element is causing hesitation among buyers and uncertainty in costing for long-term orders, according to a Delhi-based garments exporter. The uncertainty over the unspecified penalty for buying oil and arms from Russia is a significant concern for the exporters, threatening $86 billion worth of exports to the US.
The trade tensions threaten key sectors like textiles, gems, pharmaceuticals, and seafood, with exporters warning about the severe negative impact. Exporters want the BTA to turn the tariff disadvantage they currently face compared to competing countries into a distinct advantage.
Trump’s revised reciprocal tariffs formalized on August 1 place India at a 5-6% disadvantage compared to countries like Bangladesh, Vietnam, Indonesia, Malaysia, Philippines, and Pakistan, which have been hit with tariffs of 19-20%.
These demands aim to restore competitive parity for Indian exporters and resolve the trade tensions that threaten the country's exports to the US. The article was published on August 3, 2025. More meetings with exporters are in the pipeline.
- Indian exporters are demanding the immediate elimination of the 25% additional tariffs imposed on Indian imports from August 1.
- The country is also pushing for cuts in US tariffs on steel and aluminium, tariff reductions in the auto sector, and lower tariffs on labor-intensive sectors such as textiles, gems and jewellery, leather goods, garments, plastics, chemicals, shrimp, oil seeds, grapes, and bananas.
- Exporters have also requested incentives from the government to export to the US, including the re-introduction of the Merchandise Export from India Scheme and enhanced rates under existing schemes like Remission of Duties and Taxes on Exported Products.
- The US intends to impose an unspecified penalty as a punitive measure for India’s continued purchase of Russian crude oil and weapons despite sanctions against Russia, causing anxiety among Indian exporters and policymakers.
- The trade tensions threaten key sectors like textiles, gems, pharmaceuticals, and seafood, with exporters warning about the severe negative impact.
- These demands aim to restore competitive parity for Indian exporters and resolve the trade tensions that threaten the country's exports to the US, with more meetings with exporters scheduled.
