India is approaching trade negotiations cautiously and strategically in response to new tariffs imposed by the Trump administration, with a focus on protecting sensitive sectors like dairy and agriculture.
Officials stated that while trade deals take time, India has an edge over competitors due to ongoing bilateral trade agreement (BTA) talks with the U.S. and better preparedness to handle additional tariffs.
India will negotiate its trade agreements carefully and patiently in the wake of the tariffs imposed by the Donald Trump administration and protect its sensitive sectors like dairy and agriculture, officials said on Saturday, citing the example of the US which is sensitive about peanut butter.
“We have to be patient. Trade pacts do not happen overnight. It is a careful and steady process. Things are analysed carefully,” an official said on the condition of anonymity, adding that a slight impact on demand in the US could be a little challenging.
India has “emerged a winner” following the reciprocal tariffs imposed by the United States, officials said, pointing out that the country has a first mover advantage compared to its competitors owing to of the Bilateral Trade Agreement (BTA) that the two are negotiating and because Indian exporters are better positioned to deal with the additional US tariffs.
While the US has imposed 26% reciprocal tariffs on India, it has levied 34% additional import duties on China. India is also likely to gain from the US-China trade war, according to officials.
While certain exports such as fisheries could lose market share to Ecuador, which faces lower reciprocal tariffs, India can export more of the product to the European Union, they said.
Limited Impact Seen on Pharma Exports
India anticipates a small impact on its pharmaceutical exports due to the new US tariffs from the Trump administration. Washington could impose tariffs similar to what it has levied on steel imports.
India is negotiating a free trade agreement with the UK, with “very good” progress on talks, and there are similar requests from other countries including Bahrain and Qatar.
Work is also underway to provide support to exporters who would be impacted by the US tariffs. Goods exports growth in 2024-25 is expected to be slightly higher than that in the previous fiscal and 2025-26 growth will be higher than in 2024-25, said an official.
India’s goods exports in the April 2024-February 2025 period amounted to $395.63 billion.
India’s competitor Vietnam is facing 46% US tariffs, Indonesia 32% and Thailand 36%.
Officials also said that the commerce department is reaching out to domestic exporters regarding the US tariffs.
“Work is progressing to prepare the export promotion mission for extending support measures to exporters,” said the official.
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