Committed to fair, balanced deal, says India after Trump announces 25% tariffs
In a brief statement, the commerce ministry said it had 'taken note' of Trump's statement and was studying its implications while reaffirming India's commitment to a 'fair, balanced and mutually beneficial' trade deal that protects farmers, entrepreneurs and small businesses.
'The government attaches the utmost importance to protecting and promoting the welfare of our farmers, entrepreneurs, and MSMEs,' the ministry said, adding that it 'will take all steps necessary to secure our national interest, as has been the case with other trade agreements including the latest Comprehensive Economic and Trade Agreement with the UK.'
Indian officials and experts pushed back against Trump's characterisation of excessive trade barriers, arguing that his focus on goods trade deficit ignores the broader economic relationship where the US earns tens of billions more annually from services, education, and defence deals, and cited New Delhi's recent free trade agreements with developed economies such as Australia and the UK to demonstrate India's willingness to open up its market with protections for its vulnerable populations .
People familiar with the negotiations said New Delhi expects Washington to follow Trump's announcement with a formal letter that would be analysed and responded to appropriately. The Indian negotiating team – which has held five rounds of in-person discussions with its American counterparts -- will in the meantime continue talks for a balanced deal, they added.
One of the people aware of the matter pushed back against Trump's characterisation of India as maintaining excessive trade barriers, citing the recently signed free trade agreements with other developed economies including Australia and the United Kingdom where tariffs on most items were slashed.
'Hence, President Trump's generalisation that Indian tariffs are far too high, is not correct,' the person said. 'FTAs are win-win, and not one-sided.'
The person highlighted Trump's focus on goods trade surplus while ignoring broader economic ties, saying: 'President Trump has said in a post on Truth Social – 'We have a massive trade deficit with India!!!' – which is just one side of the picture. Bilateral economic relationship is not only goods trade, it also includes trade in services, investments and other significant contributions to the US economy made by Indians.'
According to government data, India had a $41.18 billion trade surplus with the US in 2024-25, exporting goods worth $86.51 billion and importing $45.33 billion of American merchandise.
However, the people cited above argued this represented only a part of the bilateral relationship. The US gains significant revenue from financial, digital and e-commerce services, fees from students studying in America and defence deals, a second person explained.
'Such cooperation in services and contributions of Indians in American businesses have immense potential for further growth through BTA and other strategic cooperation, provided the US is not fixated with tariffs, and particularly with India's sensitive sectors, which are vital for the survival of millions of Indian subsistence farmers,' the person added.
Ajay Srivastava, founder of Global Trade Research Initiative, said the US 'quietly rakes in $80-85 billion every year from India through education, digital services, financial operations, intellectual property royalties, and arms sales.'
'These massive earnings don't show up in the narrow goods trade statistics. When you factor them in, the US isn't running a deficit with India at all, it's sitting on a $35-40 billion surplus,' Srivastava added.
The second person aware of the matter said India was negotiating a comprehensive bilateral trade agreement that included not just goods but 'other key sectors such as services, investments, non-tariff barriers, IPRs and customs facilitation.'
'We hope that a successful deal would help in balancing bilateral economic cooperation and prompt the Trump administration to remove reciprocal and punitive tariffs,' the person said.
Industry leaders expressed concern about the tariff announcement's timing amid ongoing negotiations. Medical Technology Association of India chairman Pavan Choudary called Trump's move 'economically shortsighted and strategically misguided.'
'As a sovereign nation, India makes independent choices in defence and energy based on national interest and long-term strategic priorities. Attempting to punish these decisions through coercive trade measures is not only inappropriate but also counterproductive,' Choudary said.
Agneshwar Sen, trade policy leader at EY India, warned the 25% tariff could directly affect key sectors including marine products, pharmaceuticals, textiles, leather and automobiles where bilateral trade had been 'especially robust.'
However, Sen remained optimistic about ongoing negotiations, noting both countries were 'positively engaged' with the US team expected in India on August 24 for the sixth round of talks. 'I am confident that, considering our shared interests and history of cooperation, the two sides will be able to address these contentious issues constructively,' he said.
Opposition slams Modi government
Opposition parties criticised the government over the developments .
Congress general secretary Jairam Ramesh said Prime Minister Modi should 'take inspiration from former prime minister Indira Gandhi and stand up to the president of the United States.'
'All that 'taarif' between him and 'Howdy Modi' has meant little,' Ramesh said, referring to Modi's 2019 rally with Trump in Houston. 'Mr Modi thought that if he kept quiet on the insults that the US President has hurled on India... India would get special treatment at the hands of President Trump. Clearly that has NOT happened.'
Rashtriya Janata Dal MP Manoj Jha said his party was 'not very happy that it has happened under the rule of Prime Minister Modi,' while Communist Party of India MP P Sandosh Kumar described the tariffs as 'another insult to India.'
DMK leader Tiruchi Siva demanded the prime minister answer questions about the tariffs in Parliament, saying lawmakers had 'not been taken into confidence.'
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