Indian Industry Faces US Tariff Shock: 3 Urgent Steps to Protect Trade
Indian businesses are urging the government to protect them from the impact of new US tariffs set to take effect on April 2. These reciprocal tariffs are meant to counter the trade barriers American exports face in India, including both tariff and non-tariff restrictions. Industry leaders fear these levies could hurt trade, disrupt supply chains, and lead to job losses. To mitigate the damage, they are calling for a swift trade agreement between India and the US.
The US has long criticized India’s high tariff structure, with former President Donald Trump initially refusing to offer any special treatment. However, he had softened his stance in recent days, raising hopes for a compromise. With the deadline approaching, Indian industries are seeking urgent measures to safeguard their interests. A balanced trade deal could help ease tensions and protect economic growth on both sides.
Indian Industry Faces US Tariff Shock: 3 Urgent Steps to Protect Trade
Indian businesses are urging the government to shield them from the economic fallout of upcoming US tariffs, set to take effect on April 2. With mounting concerns over potential job losses and trade disruptions, industry leaders are pressing New Delhi to fast-track a trade agreement with the United States to mitigate the impact.
The US government recently announced plans to impose tariffs on Indian goods, mirroring the barriers American products face in India. These include high import duties and non-tariff restrictions, such as complex regulations, licensing requirements, and quality standards that foreign companies often struggle to meet. The move is widely seen as a direct response to India’s long-standing tariff structure, which the US has criticized as unfair to its exporters.
Why Are Indian Businesses Worried?
The primary concern for Indian industries is the risk of losing competitiveness in the US market, one of India’s largest trading partners. Sectors like textiles, engineering goods, and agricultural products could face steep price hikes due to the new tariffs, making them less attractive to American buyers. This could lead to reduced export volumes, factory slowdowns, and layoffs. Small and medium enterprises (SMEs), which form the backbone of India’s export economy, are particularly vulnerable to such disruptions.
Trade experts warn that the ripple effects could extend beyond exports. Higher tariffs may also inflate costs for Indian manufacturers that rely on US-made raw materials or machinery, squeezing profit margins and forcing price hikes for domestic consumers.
A Shift in US Stance Under Trump
The friction over tariffs isn’t new. During Donald Trump’s presidency, the US repeatedly criticized India’s “high and unfair” tariffs on American goods, such as motorcycles, almonds, and dairy products. At the time, Trump threatened to revoke India’s access to preferential trade programs and refused to grant exemptions. However, in his final months in office, he adopted a more conciliatory tone, signaling openness to negotiations. This shift raised hopes for a balanced trade deal, but progress stalled as both nations grappled with the COVID-19 pandemic and subsequent economic challenges.
Now, with the April 2 deadline looming, Indian industries are urging the government to revive talks and reach a compromise. A swift agreement could involve India lowering tariffs on specific US imports in exchange for the US delaying or reducing its planned duties.
The Push for a Trade Deal
Industry groups argue that a timely trade pact would not only prevent immediate losses but also strengthen long-term economic ties. The Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce & Industry (FICCI) have emphasized the importance of resolving non-tariff barriers, such as India’s restrictive food safety certifications and the US’s rigid pharmaceutical import rules. Addressing these issues could open new opportunities for exporters on both sides.
However, negotiations are expected to be tough. India has historically protected its agricultural and dairy sectors from foreign competition, while the US seeks greater access for its tech, healthcare, and farm products. Striking a balance without compromising domestic interests will be a challenging task for Indian negotiators.
What’s at Stake?
India-US bilateral trade totaled $119 billion in 2022–23, with India enjoying a modest surplus. A tariff war could disrupt this balance, harming industries already recovering from pandemic-related setbacks. For instance, India’s textile sector, which employs over 45 million workers, depends heavily on US demand. Similarly, American companies like Apple and Walmart have invested billions in India’s growing consumer market, and prolonged trade tensions could dampen investor confidence.
The Road Ahead
The Indian government has yet to outline its strategy, but officials have hinted at a dual approach: engaging the US in dialogue while preparing contingency measures to support affected industries. These could include financial aid, tax breaks, or subsidies to offset tariff costs. Some analysts suggest diversifying exports to other markets, like the EU or Southeast Asia, to reduce reliance on the US.
For now, businesses remain anxious. “We need clarity and quick action,” said a representative from an Indian engineering exports body. “Every day of delay adds uncertainty for our orders and workforce.”
As the deadline nears, the focus is on whether diplomacy can prevail. A fair trade deal would not only ease current tensions but also set a precedent for resolving future disputes through cooperation rather than retaliation. For millions of workers and businesses across India and the US, the stakes couldn’t be higher.