India–US Trade Talks Stalling; Indian Exporters May Face 26% Tariff
Ongoing trade negotiations between India and the United States have hit a roadblock, putting Indian exporters at risk of facing tariffs as high as 26% on specific goods entering the US market. This potential tariff hike comes amid growing tensions around market access, digital trade, and subsidy disputes.
What’s Behind the Stalemate?
The delay in finalizing a trade agreement stems from key disagreements between the two countries:
Digital Trade Regulations: The US is pushing for liberalized cross-border data flows, while India is firm on data localization policies.
Agricultural Market Access: The US wants greater access to Indian agricultural markets, which India sees as a threat to its local farmers.
Tariff Disputes: Several US industries are lobbying for retaliatory tariffs unless India removes existing duties on American goods.
As the talks drag on without resolution, the US may impose a steep 26% tariff on certain Indian exports, including textiles, jewelry, and leather products—sectors that employ millions in India.
Impact on Indian Exporters
If these tariffs are imposed, Indian exporters could face a sharp decline in competitiveness in one of their largest overseas markets. Higher costs may lead to order cancellations, reduced margins, and a loss of market share to competitors like Vietnam and Bangladesh.
Government Response and Industry Reaction
Indian trade officials are reportedly engaging in backchannel diplomacy to resolve the impasse, while industry associations are urging for swift resolution to avoid long-term damage. Exporters are also seeking short-term relief in the form of subsidies or tariff rebates.
The Bigger Picture
The stalled talks highlight the fragile nature of global trade diplomacy. With the US election season approaching and India prioritizing strategic autonomy, the chances of a quick resolution remain uncertain. For now, exporters must prepare for a more challenging export environment.
Frequently Asked Questions (FAQs)
1. Why are India–US trade talks stalling?
Talks are stalling due to disagreements on digital trade rules, market access for US farm products, and India's existing import tariffs.
2. What sectors will be most affected by the potential 26% tariff?
Textiles, jewelry, leather, and certain processed foods are among the most vulnerable sectors.
3. How much of India’s exports go to the US?
The US is one of India’s largest trading partners, accounting for over 17% of India’s total merchandise exports.
4. Can the Indian government prevent the tariff hike?
While efforts are ongoing, a breakthrough will require compromises from both sides on sensitive trade issues.
5. What should exporters do in the short term?
Exporters are advised to diversify markets, explore alternate trade routes, and seek support from government schemes for tariff relief.
Published on: June 23, 2025
Uploaded by: PAVAN
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