India-US
Even the best trade deal with US Trump may be of little good for India
This story was originally published at 19:33 IST on 8 August 2025
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By Krity Ambey
NEW DELHI – Indian imports now attract an extra 25% tariff in the US and this is set to double to 50% from Aug. 27. While Indian exporters await a saviour trade deal, even the best possible trade deal with US President Donald Trump may be of little good for India.
Currently, Indian goods attract a duty of 'most-favoured nation tariff rate + 25%' in the US. This could either rise to 'most-favoured nation tariff rate + 50%', or New Delhi could strike a deal with Washington to get a lower extra duty over and above the most-favoured nation tariff rate.
The most-favoured nation tariff rate is the standard tariff a country applies to imports from all World Trade Organization members, unless a trade agreement is in place, in which case the duty is lower than the standard rate. The irony with Trump's trade deals is that the tariff rates agreed under the trade pacts are higher than the most-favoured nation tariff rate.
The tariff agreed for all countries that have signed a trade deal with the US ranges from 10% to 20%, over and above the most-favoured nation tariff rate. The UK has been able to get the best deal with an extra tariff of 10%, including the most-favoured nation tariff rate.
The most optimistic extra tariff rate India may be able to negotiate with the US is 15%, according to former commerce ministry official and founder of think-tank Global Trade Research Initiative Ajay Srivastava.
"The Indian industry can live with an extra tariff of 15%," Federation of Indian Export Organisations Director General Ajay Sahai said. The additional 15% tariff will certainly hurt the profits of exporters, but at least India will have a tariff advantage over its Asian competitors, Sahai added. Currently, with a likely 50% extra duty, India stands nowhere in competition. The US has designated a 30% extra tariff for China, 20% for Vietnam, and 19% for both Indonesia and the Philippines.
But a trade deal with the US, at the cost of opening India's sensitive farm and dairy sector, may have political, social, and livelihood implications for India. New Delhi and Washington have so far held five rounds of negotiations for the Bilateral Trade Agreement, but the two sides are yet to iron out differences over the farm sector. India has always maintained a protective stance on the farm and dairy sector, but the US wants to push its genetically-modified crops and dairy products into India under the deal. New Delhi is unwilling to yield to these demands.
The next round of negotiations between India and the US is likely to begin on Aug. 25, just two days before the US' extra tariffs rise to 50%. Assistant US Trade Representative Brendan Lynch is likely to lead a delegation of officials to New Delhi for five-day-long trade deal negotiations.
Even with an extra 50% tariff, India may be able to retain at least 20-25% of its exports to the US, considering Washington's exemption list, Srivastava said. The White House, in its tariff proposal, has exempted some sectors from additional duty. Extra tariffs are not applicable to finished pharmaceutical drugs, active pharmaceutical ingredients, and other key drug inputs; energy products such as crude oil, refined fuels, natural gas, coal, and electricity; critical minerals; and a wide range of electronics and semiconductors, including computers, tablets, smartphones, solid-state drives, flat panel displays, and integrated circuits.
The exempted sector products accounted for nearly 42% of India's $86.51 billion of exports to the US in 2025-26 (Apr-Mar). An average of India's last four years' exports to the US suggests that the extra tariffs pose a risk to $50 billion worth of exports, or 12% of India's total annual outbound shipments. End
US$1 = INR 87.66
Reported by Krity Ambey
Edited by Avishek Dutta
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