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Hit by 25% tariff, Indian exporters now awaiting relief through bilateral trade pact with US
Hit by 25% tariff, Indian exporters now awaiting relief through bilateral trade pact with US

New Indian Express

time2 hours ago

  • Business
  • New Indian Express

Hit by 25% tariff, Indian exporters now awaiting relief through bilateral trade pact with US

The Indian export sector is bracing for a major setback following the US decision to impose a 25% tariff on Indian imports starting August 1, accompanied by an unspecified penalty over India's continued energy and defence ties with Russia. While the move has caused concern and uncertainty among Indian businesses, industry leaders are pinning hopes on an impending bilateral trade agreement (BTA) between the two countries to ease tensions and provide a roadmap for future cooperation. Dr Ajay Sahai, Director General and CEO of the Federation of Indian Export Organisations (FIEO), said the lack of clarity around the quantum of the penalty has left Indian exporters and U.S. importers without a concrete basis to calculate landed costs or plan supply chains effectively. 'This ambiguity disrupts supply chain planning and pricing strategies,' Sahai said. 'However, given the strong momentum toward a BTA between India and the U.S., industry remains cautiously optimistic.' The textile sector, one of the worst-hit segments, is particularly vulnerable. The U.S. is India's largest market for textile and apparel exports, with shipments totalling $4.59 billion between January and May 2025 — a 13% rise over the same period last year. The Confederation of Indian Textile Industry (CITI) has warned that the steep tariff hike significantly erodes India's competitive edge, especially against regional rivals like Vietnam (20% tariff), Indonesia (19%), and Cambodia (36%). 'The new tariff rate is going to seriously test the resolve and resilience of India's textile and apparel exporters,' said CITI Chairman Rakesh Mehra. 'Planning becomes difficult with no clarity on the penalty amount.' Still, Mehra expressed hope that the issue would be resolved under the forthcoming BTA and urged the government to support exporters in navigating the crisis. Mehra also stressed the importance of preserving not just exports but employment in a sector dominated by MSMEs, with India targeting $100 billion in textile exports by 2030.

Trump slaps 25% tariff on imports from India ‘plus a penalty' for buying Russian oil, weapons, and ‘obnoxious' trade barriers
Trump slaps 25% tariff on imports from India ‘plus a penalty' for buying Russian oil, weapons, and ‘obnoxious' trade barriers

The Hindu

time2 hours ago

  • Business
  • The Hindu

Trump slaps 25% tariff on imports from India ‘plus a penalty' for buying Russian oil, weapons, and ‘obnoxious' trade barriers

Putting an end to months of speculation, U.S. President Donald Trump on Wednesday (July 30, 2025) announced that imports from India will attract 25% tariffs from August 1, 'plus a penalty', citing India's purchases of energy and military equipment from Russia, its high tariffs, and its 'strenuous and obnoxious' non-monetary barriers to trade. India and the U.S. have been negotiating a potential Bilateral Trade Agreement (BTA) since February, when a joint statement by Prime Minister Narendra Modi and Mr. Trump stated that such a deal would be concluded by fall 2025. No mini-deal Apart from that comprehensive deal, negotiators from the two countries have also been trying to work out a 'mini-deal' that would walk back the retaliatory tariffs that Mr. Trump announced for India and a number of other countries. This mini-deal, however, has not yet been finalised. Statements by U.S. Trade Representative Jamieson Greer on Monday (July 28, 2025) also indicated that negotiations with India may extend beyond the August 1 deadline set by Mr. Trump. The U.S. President's statement on Wednesday (July 30, 2025), however, seems to confirm that such a mini-deal will not materialise. The Hindu has reached out to the Ministry of Commerce and Industry for a comment or response and this report will be updated as and when it is received. 'Strenuous and obnoxious' 'Remember, while India is our friend, we have, over the years, done relatively little business with them because their tariffs are far too high, among the highest in the world, and they have the most strenuous and obnoxious non-monetary trade barriers of any country,' Mr. Trump wrote on the social media platform Truth Social. 'Also, they have always bought a vast majority of their military equipment from Russia, and are Russia's largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE — ALL THINGS NOT GOOD! INDIA WILL THEREFORE BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST [sic],' he added. This tariff rate is marginally lower than the earlier 26% tariff that Mr. Trump had threatened to levy on imports from India. The additional 'penalty' is now the unknown factor, however, as Mr. Trump did not specify what form it will take. Retaliatory tariffs In early April, the U.S. President had imposed retaliatory 'Liberation Day' tariffs on imports from most countries in the world, arguing that these countries imposed much higher tariffs on U.S. goods than the U.S. did on imports from them. Thereafter, he announced a 90-day pause, so as to work out bilateral trade deals with several of these countries. At the end of the 90-day pause in July, Mr. Trump further extended this window to August 1. During this period, he issued letters to at least 14 countries stating the tariffs that would be imposed on imports from them. Making deals with Trump Over the last month, he has also concluded deals with the United Kingdom (U.K.), Indonesia, the Philippines, Japan, and the European Union. The deal with the U.K. will see British car exports to the U.S. attract a 10% tariff, down from the earlier 27.5% and a removal of tariffs on aerospace exports to the U.S. Indonesia's exports to the U.S. will now attract a 19% tariff under its deal with the U.S., the same as will be charged on U.S. imports from the Philippines. Japan negotiated lower tariffs of 15% for its exports to the U.S., the same as the European Union. Stand up to the U.S.: Congress The Congress party took aim at Mr. Modi over the 25% tariff announced by Mr. Trump. 'President Trump has slapped a tariff of 25% plus penalty on imports from India,' said Congress communications secretary and Rajya Sabha MP Jairam Ramesh, in a post on X. 'All that taarif between him and Howdy Modi has meant little.' Mr. Ramesh also highlighted the U.S. President's repeated claims of stopping Operation Sindoor, his special lunch for the Pakistan Army Chief, and U.S. support for financial packages to Pakistan from the International Monetary Fund (IMF) and the World Bank, saying the Prime Minister apparently hoped his silence on all of these issues would ensure that India would get special treatment at the hands of Mr. Trump. 'Clearly that has NOT happened,' Mr. Ramesh added. 'He should take inspiration from Indira Gandhi and stand up to the US President.'

Tariff clock ticks away: Indian exporters dread what Trump might bring two days from now
Tariff clock ticks away: Indian exporters dread what Trump might bring two days from now

Economic Times

time3 hours ago

  • Business
  • Economic Times

Tariff clock ticks away: Indian exporters dread what Trump might bring two days from now

Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads With Trump 's tariff deadline almost at hand, Indian exporters are facing a greatly uncertain landscape. Orders are being held back as businesses await clarity on the US President's next steps, the Times of India reported on July 30. According to Sudhir Sekhri, chairman of the Apparel Export Promotion Council, the situation remains quite store shelves are running low, but many buyers are delaying production until the tariff situation becomes clearer, Sekhri told ToI's the deadline for tariffs draws near, the focus remains on how the unfolding developments will shape the future of Indian exports. With discussions set to resume on August 25, there remains a glimmer of hope for a last-minute resolution. However, for now, uncertainty reigns, leaving exporters in a precarious position as they navigate the complexities of international Bhansali, the chairman of the Gem & Jewellery Export Promotion Council, shared a similar sentiment. While he remains hopeful for a favourable outcome for India, he acknowledged that the current tariff uncertainty has already affected order some shipments are being processed at a 10% duty, many buyers are holding off, having stocked up during a shipping rush in concerns extend beyond the apparel and jewellery sectors. Satish Wagh, chairman of Chemexcil, noted that the marginal growth of just 0.1% in exports to the US during the April to June 2025 period indicates stagnation, likely due to the looming tariff has been a notable decline in shipments of agrochemicals and dye intermediates, suggesting that buyers may be reconsidering their inventory needs or renegotiating contracts in light of potential price the challenges, trade officials remain cautiously optimistic. Ajai Sahay, director general of Fieo, pointed out that while the delay in the India-US Bilateral Trade Agreement (BTA) is concerning, it is unlikely to hinder long-term trade exporters and importers recognise that a deal will eventually be reached and are willing to absorb short-term costs in anticipation of better conditions, Sahay garment sector is particularly strained. China has ramped up its exports to Europe, capitalising on the tariffs imposed by the US, which has made it harder for Indian exporters to informed that during this lean season from May to August, Indian exporters typically operate at around 70% capacity. However, the current situation has reduced this to about 50%, further complicating matters.

India-US deal: Donald Trump's tariff threats an act of ‘arm-twisting'; UK pact a ‘trendsetter'
India-US deal: Donald Trump's tariff threats an act of ‘arm-twisting'; UK pact a ‘trendsetter'

Time of India

time4 hours ago

  • Business
  • Time of India

India-US deal: Donald Trump's tariff threats an act of ‘arm-twisting'; UK pact a ‘trendsetter'

File photo: US President Donald Trump (Picture credit: PTI) US President Donald Trump's recent tariff warnings to India have drawn sharp criticism from Indian trade experts, with Professor Rakesh Mohan Joshi, vice chancellor of the Indian Institute of Foreign Trade (IIFT), likening them to 'arm-twisting' tactics. In a strong statement as quoted by ANI, Professor Joshi said Trump was using tariff threats to push other countries, including India, into one-sided trade deals that could jeopardise domestic interests. 'He's forcing countries to buy energy, forcing countries to buy some technology, aircraft and defence equipment just to balance the trade,' Professor Joshi said, referring to similar deals the US had recently struck with the EU, Indonesia and the Philippines. In these agreements, the US imposed tariffs but secured free market access in return, including mandatory procurement of American goods, he explained. Opening Indian dairy and agriculture sectors would spell disaster Focusing on the ongoing India-US bilateral trade agreement (BTA) negotiations, Professor Joshi warned against conceding to US demands for duty-free access to Indian dairy and agricultural markets. 'We produce more than double the milk that America produces,' he noted. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Senior Living Homes in Dhaka May Surprise You Senior Living | Search Ads Undo 'If duty-free access is given to the US, it would devastate our dairy sector and leave farmers at the mercy of God.' Joshi pointed out the stark contrast between agriculture in the two countries. 'In America, agriculture is a commercial enterprise. In India, it is about livelihood. I compliment our negotiators for resisting pressure on these sensitive sectors,' he said. India-UK FTA praised as model agreement While criticising the US approach, Joshi lauded the India-UK Free Trade Agreement as 'balanced and win-win.' He described the FTA as a 'trendsetter' that reflects long-term diplomacy and mutual trust. 'It is not by threatening or arm-twisting that you can strike a deal,' he asserted. Under the India-UK deal, duties have been reduced on 90% of UK products entering India, while 99% of Indian products enjoy lowered tariffs in the UK market. 'This agreement sets a benchmark the world must learn from,' Joshi added. Stay informed with the latest business news, updates on bank holidays and public holidays . Discover stories of India's leading eco-innovators at Ecopreneur Honours 2025

Last-ditch efforts on to avoid higher US tariffs as India pushes for trade pact: Sources
Last-ditch efforts on to avoid higher US tariffs as India pushes for trade pact: Sources

Economic Times

time4 hours ago

  • Business
  • Economic Times

Last-ditch efforts on to avoid higher US tariffs as India pushes for trade pact: Sources

AI generated image for representation purposes. With the deadline of August 1 approaching fast, the last-ditch efforts are on to iron out differences for an interim trade deal between India and the US, sources said. August 1 marks the end of the suspension period of tariffs imposed by US President Donald Trump on dozens of countries, including India (26 per cent). However, the baseline tariff of 10 per cent remains. Sources also said that in case the talks for an interim trade deal get extended beyond August 1, the pact would supersede the existing duty structure on the country. "Talks are on," one of the sources said. Meanwhile, the US team is visiting India from August 25 for the next round of negotiations for the proposed bilateral trade agreement (BTA) between the two countries. India and the US teams concluded the fifth round of talks for the agreement last week in Washington. Issues including customs and trade facilitation were discussed during that round. India's chief negotiator and special secretary in the Department of Commerce Rajesh Agrawal and Assistant US Trade Representative for South and Central Asia Brendan Lynch held the deliberations. US President Donald Trump has said the trade deal with India is not finalised, as he stressed that India imposes more tariffs than almost any other country. Trump spoke to reporters on Tuesday on Air Force One on his way back to Washington from Scotland and was asked about the trade deal with India. "No, it's not," Trump said when asked if the deal with India is finalised. He was also asked about reports that India is preparing to face higher US tariffs between 20-25 per cent, to which he replied, "I think so." On April 2 this year, Trump announced high reciprocal tariffs. The implementation of high tariffs was immediately suspended for 90 days till July 9 and later until August 1, as America is negotiating trade deals with various countries. India has hardened its position on the US demand for duty concessions on agri and dairy products. New Delhi has, so far, not given any duty concessions to any of its trading partners in a free trade agreement in the dairy sector. India is seeking the removal of the 26 per cent additional tariff. It is also looking at the easing of tariffs on steel and aluminium (50 per cent) and the auto sector (25 per cent). These issues are an important part of the trade pact negotiations. Against these, India has reserved its right under the WTO (World Trade Organization) norms to impose retaliatory duties. The country is also seeking duty concessions for labour-intensive sectors, such as textiles, gems and jewellery, leather goods, garments, plastics, chemicals, shrimp, oil seeds, grapes, and bananas, in the proposed trade pact. On the other hand, the US wants duty concessions on certain industrial goods, automobiles, especially electric vehicles, wines, petrochemical products, agri goods, dairy items, apples, tree nuts, and genetically modified crops. The two countries are looking to conclude talks for the first tranche of the proposed bilateral trade agreement (BTA) by fall (September-October) this year. Before that, they are looking for an interim trade pact. India's merchandise exports to the US rose 22.8 per cent to USD 25.51 billion in the April-June quarter this financial year, while imports rose 11.68 per cent to USD 12.86 billion.

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