India Eyes Export Gains Amid US Tariff Shifts; Trade Talks With Washington Intensify

New Delhi, July 14 – India is positioned to take advantage of the Trump administration’s tariffs on key trading partners, including China, Canada, and Mexico, which will present new opportunities for Indian exporters to enter the US markets.

The US and India may be edging closer to a trade deal, and the US is likely to reduce its proposed tariff rate to below 20% from the originally suggested 26%. Indian officials are scheduled to visit the US shortly to conclude the deal.

As per the third edition of NITI Aayog’s Trade Watch Quarterly, India will have a competitive advantage in 22 of the top 30 product categories exported to the US.  India can also access multi-billion-dollar export opportunities in chemicals, apparel and ASEAN markets.

Tariff Shift Opens Up Market Opportunity

The report highlights that the latest tariff measures — with hikes of 30% on Chinese goods, 35% on Canadian goods, and 25% on Mexican products — have significantly altered trade dynamics. These three nations are among the largest suppliers to the US in the affected categories. This presents Indian exporters with a strategic window to expand market share across sectors like pharmaceuticals, textiles, and electrical machinery.

India’s potential gains span product categories representing a cumulative market of USD 2,285.2 billion. While India’s competitiveness remains neutral in six categories (accounting for 32.8% of India’s US-bound exports and 26% of total US imports), the report identifies 78 products where India is expected to gain ground. These 78 products make up 52% of India’s current exports to the US and 26% of total US imports.

High-Tariff Sectors Offer Maximum Headroom

India stands to benefit especially in sectors with significant tariff differentials compared to China, Canada, and Mexico. These include minerals and fuels, apparel, electronics, plastics, furniture, and seafood, representing a market opportunity of USD 1,265 billion.

However, for six HS-2 level product categories where India faces a higher average tariff (between 1 to 3%), the Aayog emphasised the need for bilateral negotiations to secure better terms.

MSME Boost and PLI Expansion Recommended

To maximise the benefits of these shifts in trade, the Aayog recommended extending the Production-Linked Incentive (PLI) schemes to include labour-intensive sectors such as leather, footwear, furniture and handicrafts. The think tank also recommended rationalising electricity tariffs by reducing cross-subsidisation for industrial users and facilitating renewable energy to reduce costs and improve competitiveness globally.

Moreover, the Aayog subsequently recommended a services-centric trade agreement with the United States, similar to the India-UK model. The agreement should focus on key sectors such as information technology, financial services, professional services, and education and incorporate strong provisions for digital trade to enhance trade in services seamlessly across borders.

India-US Trade Talks Advance Towards Bilateral Pact

As trade dynamics evolve, an Indian commerce ministry delegation has arrived in Washington for a new round of negotiations on the proposed Bilateral Trade Agreement (BTA). Talks, which began Monday, are focused on resolving critical issues in agriculture and the auto sector.

This latest visit follows earlier discussions held from June 26 to July 2. The urgency of the talks is underscored by the US postponing the imposition of additional tariffs on India and other nations until August 1. The Trump administration had originally announced the tariffs on April 2, then deferred their implementation twice — first to July 9, and now to August 1.

Key Negotiation Points and Deadlines

India has been firm in its stance, particularly resisting duty concessions on agri and dairy products — areas where no such concessions have been extended in previous FTAs. New Delhi is pushing for the rollback of a 26% additional tariff and reduced duties on steel, aluminium (currently at 50%), and automobiles (25%).

The US, in return, is seeking greater market access for electric vehicles, wines, petrochemical products, and various agri goods, including genetically modified crops and tree nuts.

Both nations are targeting a preliminary trade pact ahead of a broader BTA expected by fall 2025 (September–October), with the possibility of announcing an interim agreement before final terms are concluded.

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