India seeks tariff relief as strong US demand cushions impact of high duties

India’s firm economic footing and a smaller-than-anticipated drop in exports to the United States have strengthened New Delhi’s bargaining position in its ongoing trade discussions with Washington, even as US tariffs of up to 50% continue to weigh on select sectors, according to a Reuters report.

Exports to the US totalled $6.3 billion in October, an 8.6% decline from a year earlier. While still negative, the fall marks an improvement from the 12% contraction in September, the first month reflecting the full effect of the steep 50% duty. The relatively mild impact has given Indian officials greater confidence in pursuing a cautious, long-term strategy.

“We have so far avoided the harshest consequences of the 50% U.S. tariff,” a senior government official told Reuters. Although textile shipments have taken a hit, broader export performance remains intact, the official said, enabling negotiators to take a measured approach rather than rushing into concessions.

New Delhi has held off on reaching a swift agreement, even as countries such as Japan and South Korea have already settled tariff arrangements with the US Officials familiar with the talks expect Washington to eventually reduce the 25% tariff tied to India’s discounted Russian oil purchases, bringing overall duties down to around 15%. In exchange, India is prepared to lower tariffs on more than 80% of imported goods, while retaining higher protection for sensitive areas like agriculture.

Exporters are adjusting to the new environment through diversification and pricing flexibility. Many firms have expanded shipments to Africa and Europe, while maintaining US buyers by offering discounts and extended delivery windows. Some apparel and footwear exporters are absorbing up to 20% in additional costs.

Trade data for April–October 2025 underscores the resilience of India’s export base. The US remains India’s largest export market, with shipments reaching $52.12 billion, supported by robust demand for engineering goods, pharmaceuticals, electronics, and gems and jewellery. The UAE, the Netherlands, and China follow as key destinations.

Despite persistent trade frictions, China continues to dominate as India’s biggest source of imports, highlighting the country’s deep integration with global supply chains—even as New Delhi works to secure more favourable terms with its largest export partner.