India can walk into the negotiating room with the US far more confidently than ever, thanks to a strong economy and a milder-than-expected hit to its exports, according to officials and analysts cited by Reuters.
Despite the United States slapping tariffs of up to 50% on Indian imports, the drop in New Delhi’s shipments has been less severe than projected.
Outflows to the US fell 8.6% year-on-year to $6.3 billion in October. The drop was smaller than September’s 12% decline, the first month under Trump’s 50% tariff.
The slower decline has eased pressure on New Delhi, even as other Asian economies such as Japan and South Korea have already concluded agreements with Washington to bring down duties.
India’s ‘ready to wait’ approach
Indian authorities have maintained their stance, implying that they are in no hurry to seal a deal.
“For now, we've avoided the worst impact of the 50% US tariffs,” a senior government official aware of the negotiations told Reuters. While acknowledging that industries like textiles have seen fewer orders, the official said the broader effect on the economy remained contained, giving India time to push for favourable terms.
“If needed, we are ready to wait,” the official added.
People involved in the discussions said they expect the US to reverse the 25% duty linked to India’s Russian oil purchases and eventually ease tariffs to around 15%. In exchange, India is prepared to reduce import duties on more than 80% of goods, while keeping protections for sensitive segments such as agriculture.
Last week, US President Donald Trump said that Washington was nearing an agreement with India that would broaden economic and security cooperation. Commerce minister Piyush Goyal also said earlier in the week that ‘good news’ may come as soon as the countries agree to a fair and balanced deal.
How is India helping its exporters
Officials told Reuters that the country has been supporting exporters through recent trade agreements with the UK, UAE and Australia, tax reductions on raw materials and a $5.1 billion support package.
Exporters and industry groups reported that many firms have offset the drop in US demand by expanding into African and European markets, while holding on to American clients through discounts and flexible delivery schedules.
Apparel and footwear companies are absorbing additional costs of up to 20% to retain US buyers, said Ajay Sahai, director general of the Federation of Indian Export Organisations. Targeted relief measures, including short-term loan moratoriums, have been introduced, although authorities have avoided large-scale fiscal stimulus.
Industry associations say that domestic tax cuts on hundreds of consumer goods introduced since September have strengthened local demand and helped exporters remain price-competitive. Reductions on inputs such as man-made fibres have also supported textile shipments, said N. Thirukkumaran, general secretary of the Tirupur Exporters’ Association. He added that garment exporters are offering discounts ranging between 10% and 20%, depending on design and shipment size.
India’s economy grew 7% in the July–September quarter and is expected by the central bank to expand 6.8% this financial year.
Competition with Chinese goods
Exporters said increasing competition from China remains a major hurdle. Cheaper Chinese products have been entering several markets where Indian firms operate, challenging their margins and pricing power.
“Chinese businesses are well-entrenched and their domestic situation has made them highly competitive,” said Rahul Tikoo, CEO of Optime, a speciality chemical manufacturer based in Mumbai.
India’s goods exports to destinations outside the US fell 12.5% in October from a year earlier, a sharper contraction than to the US, with engineering, petroleum and jewellery items leading the decline.
HSBC chief India economist Pranjul Bhandari told Reuters that the trend “may reflect heightened competition in non-US markets as countries diversify exports post tariff announcements.”
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