Over half of Indian exports to US unaffected by new tariffs: Sources

More than half of Indian exports to the United States are expected to remain unaffected by the newly announced US tariffs, sources told CNBC-TV18.As per the think tank GTRI, India’s exports exempted from US tariffs include finished pharmaceutical drugs, active pharmaceutical ingredients (APIs); energy products like crude oil, refined fuels, natural gas, coal, and electricity; critical minerals; semiconductors; and electronic products like computers, tablets, smartphones, solid-state drives, flat panel displays, and integrated circuits.Pointing to the use of animal feed in the US dairy sector, sources cited “religious sentiments” as a reason why dairy and agriculture are considered red lines in all Free Trade Agreements (FTAs) by India. Sources added that the 25% tariffs on India’s exports worth $40 billion are expected to have little impact on the nearly $4 trillion Indian economy with 140 crore consumers.Yesterday, sources had indicated that the US announcement of 25% tariffs on goods from India is being analysed, and that India will wait and watch, choosing to present its response at the negotiating table rather than opt for immediate retaliation. Assuring that the US tariff announcements are not a “cause for worry”, sources told CNBC-TV18 that India is unlikely to “jump the gun” before having clarity on the evolving situation.Sources also said there is still no clarity on the penalties and associated duties until formal notifications are issued by the US government. For now, the sixth round of negotiations is scheduled for 25th August for the first tranche of a Bilateral Trade Agreement (BTA) between India and the US. Meanwhile, bilateral trade discussions are expected to continue virtually.In fiscal year 2024-25, India and the United States recorded bilateral trade worth $131.8 billion, with India’s exports valued at $86.5 billion and imports at $45.3 billion.Addressing both houses of Parliament yesterday, India’s Commerce and Industry Minister said the Ministry is engaged with all stakeholders, including exporters and industry, to gather feedback and assess the situation. Stating that the government gives utmost importance to protecting and promoting the welfare of farmers, workers, entrepreneurs, exporters, MSMEs, and all sections of the industry, Goyal said India has already signed mutually beneficial trade agreements with the UAE, UK, Australia, and EFTA countries in an increasingly protectionist world, and remains committed to similar trade agreements with other countries.India’s trade surplus with the US rose to $41 billion in FY24-25, from $35.32 billion in FY23-24 and $27.7 billion in FY22-23. In 2024, India’s key exports to the US included drug formulations and biologicals worth $8.1 billion, telecom instruments worth $6.5 billion, precious and semi-precious stones worth $5.3 billion, petroleum products worth $4.1 billion, vehicle and auto components worth $2.8 billion, gold and other precious metal jewellery worth $3.2 billion, ready-made garments of cotton worth $2.8 billion, and iron and steel products worth $2.7 billion.Imports from the US during the fiscal year included crude oil worth $4.5 billion, petroleum products worth $3.6 billion, coal and coke worth $3.4 billion, cut and polished diamonds worth $2.6 billion, electric machinery worth $1.4 billion, aircraft, spacecraft and parts worth $1.3 billion, and gold worth $1.3 billion. India has called for the removal of the 26% tariff, as well as easing of 50% tariffs on steel and aluminium exports and 25% tariffs on auto exports. India also reserved the right under WTO norms to impose retaliatory duties over the imposition of unilateral tariffs.On April 2, 2025, the US President issued an executive order on reciprocal tariffs, imposing additional duties ranging from 10% to 50% on imports from its trading partners. A baseline duty of 10% has been effective since 5th April 2025. The additional duty on India was announced at 26%, including the baseline tariff.Originally, the full country-specific additional duty was to be effective from 9th April 2025, but was postponed for 90 days on April 10, 2025 and further extended up to August 1, 2025. India and the US entered negotiations for a fair, balanced and mutually beneficial Bilateral Trade Agreement (BTA) in March 2025, targeting completion of the first tranche by fall 2025.The two sides finalised the Terms of Reference (ToR) for BTA negotiations on March 29, 2025 during the first physical round of discussions held in New Delhi. Since then, four physical rounds of negotiations have been held between the two sides, in New Delhi and Washington D.C., in line with the agreed ToR. In addition, multiple virtual meetings have taken place.

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