7 days ago
India-US trade deal: India Inc's America plans on hold; clarity on Donald Trump's tariffs on India, agreement awaited
Bilateral trade agreement discussions between India and the US remain ongoing. (AI image)
India-US trade deal: As talks between India and the US for an interim trade deal continue, India Inc is faced with uncertainty for their America plans. Corporates are in a wait-and-watch mode to finalise plans looking for clarity on tariff rates applicable on India if an interim deal is reached with the Donald Trump administration.
Extended trade negotiations between India and the US are impacting Indian businesses, affecting export orders, operational strategies, and the acquisition of new American clients, according to an ET report.
Bilateral trade agreement discussions between India and the US remain ongoing. The US administration extended a 90-day suspension on reciprocal tariffs for most trading partners to August 1 from July 9. The US had on April 2 suggested a 26% tariff rate for India.
Trade Deal: India Inc on Hold Mode
Industry leaders report that global companies are exercising caution, awaiting the results of the trade deal discussions. This cautious approach is evident across key industries including electronics, textiles, apparel, seafood, and gems and jewellery sectors.
Leading electronics manufacturers such as Bhagwati Products (owned by Micromax), Karbonn Group, and Dixon Technologies have indicated that whilst existing US exports continue, new orders are suspended pending clarity on trade talks.
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"Prospective clients who wanted to manufacture in India for the US are in a wait-and-watch mode, expecting clarity on where India stands vis-a-vis China and Vietnam in terms of US tariff," Atul Lall, managing director at Dixon Technologies told ET. Dixon produces Motorola smartphones for exports to the US.
Final Call Awaited on Trade Deal
Karbonn Group managing director Pardeep Jain noted the prevailing high level of uncertainty regarding the US market.
"Brands have made it clear that if there is no substantial duty difference between India and China, they are unlikely to shift manufacturing to India. Discussions are still continuing," he said.
Trade deal uncertainty is also affecting India's extended export commitments in the gems and jewellery sector, particularly relating to the Christmas and end-of-year retail season.
"The process of placing orders for Christmas usually begins in June from the JCK Show of jewellery at Las Vegas; first with sample line orders followed by the full orders in September-October," said Sabyasachi Ray, executive director, The Gems and Jewellery Export Promotion Council according to the financial daily.
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According to Ray, American purchasers are engaging in price discussions, anticipating reduced demand if Indian jewellery prices increase due to higher tariffs. He noted that certain buyers are discussing ways to distribute the additional costs.
The textile industry's representative body CITI's secretary general Chandrima Chatterjee expressed short-term optimism about India securing a favourable deal, with competitive tariffs compared to its main rivals.
"However, this optimism may not completely translate into orders in the medium term due to the vague scenario about applicable product specific tariffs that will unfold," she told ET . "There is cautious optimism. The buyers are holding back on big orders as the sectoral or category-wise tariff rates could vary significantly."
The seafood export sector is experiencing a decline in orders recently, with international buyers questioning suppliers about their willingness to accept additional tariff costs.
"There is a slowdown in exports from the past three weeks as new orders are not coming," said Pawan Kumar G, president, Seafood Exporters' Association of India.
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India-US Trade Deal Soon?
US President Donald Trump indicated on Wednesday that an agreement with India might be concluded shortly. Trade relations between India and the United States are substantial, with bilateral commerce reaching $131.84 billion in FY25, establishing the US as India's main trading partner.
Under a new agreement, the US has implemented a 19% tariff on Indonesia and 30% on the European Union starting August 1. Trump has issued tariff notifications to approximately 24 nations, including Canada, Japan, and Brazil, with rates ranging from 20% to 50%, alongside a 50% tariff on copper. For smaller nations, the anticipated rate is approximately 10-15%.
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