The federal government is exploring a slew of short-term and long-term measures to assist Indian trade tide over the fallout of the 50% tariffs on items despatched to the US—one of many few nations with which India runs up a large commerce surplus, individuals conscious of discussions stated.
The technique consists of steps to advertise exports, divert commerce, and create home demand by substituting objects which are imported, these individuals added, describing the decision-making following current engagements between the federal government and producers and exporters.
The steps come whilst officers in New Delhi maintained common technical engagement with counterparts in Washington.
The turbulence within the ties, nevertheless, is essentially political: Trump has hit out at India, first slamming it for having levies which are “among the many highest on this planet” and saying a 25% price on Indian exports on July 31. Then, on August 7, he issued an govt order slapping one other 25%, citing India’s buy of Russian oil that, Washington has claimed, helps fund the warfare in Ukraine.
“As sovereigns, India and the US can have a mutually helpful commerce deal. However President Donald Trump’s unilateral selections to impose punitive tariffs when talks are ongoing are unwarranted and counterproductive,” one individual stated, including that each side stay engaged to seek out amicable options.
This echoes India’s acknowledged place. Ministry of exterior affairs spokesperson Randhir Jaiswal referred to as the tariffs “unfair, unjustified and unreasonable” on Thursday whereas vowing that India would “take all obligatory measures to safeguard its nationwide pursuits and financial safety.”
Bilateral commerce negotiations between India and the US are progressing effectively “as on date” however nothing is for certain given the unpredictable nature of the US management, the individual quoted above added.
On one of many key contentious points—oil from Russia—the individuals added that India will proceed buying crude oil from nations of its selection, together with Russia and 38 different nations, no matter the Trump administration’s “unjustified transfer”.
Nevertheless, business dynamics are already reshaping India’s power sourcing patterns. Public sector refiners have scaled down purchases of Russian crude in current months for business causes, as reductions on Russian oil have narrowed considerably.
In response to two individuals with direct information, refiners typically purchase Russian crude from the spot market relying on reductions. “They decide the quantum of buy as per their business judgement and the federal government has not requested them to curtail buy of crude oil from any explicit nation,” one individual stated.
“Equally, personal refiners are free to buy crude from any nation,” he added, noting their selections additionally depend upon out there reductions.
A report by ranking company ICRA reveals Russia accounted for roughly 35% of India’s crude imports in FY2025. The month-to-month common imputed value of crude petroleum imports from Russia was about 13% and 14% decrease than West Asian provides in FY2023 and FY2024 respectively, resulting in financial savings of $5.1 billion in FY2023 and $8.2 billion in FY2024.
“Nevertheless, the extent of low cost narrowed sharply to round 7% in FY2025, lowering the financial savings to $3.8 billion. Given the narrowing of reductions on Russian crude since FY2025, coupled with sanctions by the EU and the US, it seems more and more unlikely that such imports from Russia will profit India materially going ahead,” ICRA stated.
State-run Indian Oil Company, Hindustan Petroleum Company, Bharat Petroleum Company and the petroleum ministry didn’t reply to electronic mail queries on the matter.
Firms sometimes don’t reveal the amount and worth of crude purchases from particular person nations.
Authorities departments and trade are holding consultations to evaluate the influence of US tariff motion and establish options, in line with a 3rd individual concerned in such conferences.
Out of roughly $86 billion in exports to the US, about 40% contains non-price delicate objects comparable to basmati rice and Indian jewelry that may not be considerably affected.
Nevertheless, sectors together with textiles and chemical substances face substantial influence.
Information company Reuters quoted the managing director of Pearl International, whose US shopper record consists of Hole and Kohl’s, as saying that the corporate has begun receiving panic calls with an ultimatum for it to share the tariff hit or transfer manufacturing out of India.
“All the purchasers are already calling me. They need us to … shift from India to the opposite nations,” Pallab Banerjee advised Reuters. To calm US clients’ nerves, the corporate has supplied to shift manufacturing to its 17 factories in Bangladesh, Indonesia, Vietnam and Guatemala to bypass the steep US levies on Indian imports.
Trump’s preliminary tariff proposals in April have been decrease for India than for the rival Asian garment hubs of Bangladesh, Vietnam and China.
However the tables have turned as relations between New Delhi and Washington have soured, with India now dealing with a 50% tariff, versus 20% for Bangladesh and Vietnam, and 30% for China.
India exports textiles price $11 billion to the US, representing about 9% of complete Indian merchandise exports to America.
The federal government is contemplating sector-specific calls for from home manufacturing, together with extension of current export promotion schemes, introduction of recent schemes, ease of compliances and commerce diversification.
“We will intensify our efforts to discover new markets in order that US-bound items may be diverted to different nations,” the third individual stated, including: “Main economies of the world are desirous to have free commerce agreements with India due to its home market”.
A 3rd possibility is to harness home demand. “We have already got a big market with aspiring middle-class customers. We should now harness our personal energy to spice up our manufacturing, thus substituting imports by encouraging home manufacturing.”
The multi-pronged strategy displays India’s willpower to take care of strategic autonomy in power procurement while exploring different markets and strengthening home manufacturing capabilities to cut back dependence on the US market.
The technique acknowledges that whereas quick disruption from tariffs is inevitable, India’s giant home market and rising center class present leverage for long-term financial restructuring that would in the end cut back vulnerability to exterior commerce pressures.
