By Agence France-Presse
Indian exporters are anxiously eyeing the possible reintroduction of Donald Trump’s punishing tariffs next week, though many hold out hope for a last-minute reprieve.
The U.S. President’s April 2 “Liberation Day” announcement of swinging levies on dozens of key trading partners sent shockwaves through capitals before he announced a pause for negotiations, which will end on June 9.
New Delhi and Washington have been locked in multiple rounds of talks, with hopes for an interim pact to avert the 26 percent “reciprocal” tolls meted out to India.
The tariffs, which came on top of 10 percent levies across the board for every country, were imposed for what the White House says are unfair U.S. trade deficits.
While India—the world’s most populous country—is not a manufacturing powerhouse, it still ran up a $45.7 billion trade surplus with the United States in 2024. And now, some of its most labor-intensive exports, including electronics, gems and jewelry, and shrimp, are under threat.
Director General of the Federation of Indian Export Organizations Ajay Sahai told AFP, “Exporters are ‘optimistic’ that India may be able to carve out a bilateral agreement on the trade side at least.”
But he added that it was “quite a fluid situation,” suggesting one outcome could see the deadline extended, given that India is “constructively engaged” with Washington.
He said, “The feedback which I am getting suggests positive developments either way—and we are hopeful.”
Seafood Exporters Association of India Secretary General KN Raghavan said, “India’s seafood industry is seeing ‘some amount of anxiety,’ but also ‘more reason for hope.’” He did not give details but said a “solution appears to be in the anvil.”
U.S. officials have been upbeat about the prospect of an agreement. Trump raised the possibility of an agreement on Tuesday, July 1, saying it is “going to be a different kind of a deal.”
He added, “It’s going to be a deal where we’re able to go in and compete. Right now, India doesn’t accept anybody in. I think India is going to do that, and if they do that, we’re going to have a deal for much less tariffs.”
His Commerce Secretary Howard Lutnick said last month that a pact could be expected in the “not too distant future.”
However, Indian media reports, quoting unnamed sources, struck a more neutral tone, saying negotiators were still working to resolve key differences that had cropped up during talks.
‘Alternative sources’
An Indian commerce ministry official told AFP that New Delhi’s unmet demands included relief from separate sectoral tariffs on steel and aluminum, as well as greater access for labor-intensive exports, including textiles and footwear.
They have also spoken of disagreements over Washington’s push to have India open up its agriculture sector and allow freer trade of American farm produce.
Finance Minister Nirmala Sitharaman has said she was eager for a deal. She told India’s Financial Express newspaper, in an interview printed on Monday (July 1), “I’d love to have an agreement, a big, good, beautiful one; why not?”
However, Sitharaman added that “agriculture and dairy” are the “very big red lines.”
Experts believe a smaller agreement is still possible ahead of the deadline.
Ajay Srivastava of Global Trade Research Initiative, a New Delhi-based think tank, said in a recent note, “The more likely outcome is a limited trade pact.”
Srivastava said that under such a deal, India could cut tariffs on a range of industrial goods and offer limited access for U.S. agricultural produce—in return for Trump dropping the 26 percent levies.
But he also warned that talks “may collapse” if Washington “continues to insist on opening India’s core agriculture sectors or allowing entry of GMO (genetically modified organism) products.” And seafood exporters remain on edge as talks go down to the wire.
Raghavan said, “Currently, exporters believe they can manage with a 10 percent tariff, as it can be absorbed. But if it goes back up to 25 percent to 30 percent levels, we could see American buyers finding alternative sources.”
He added, “They will find some other cheaper source.”
