The US is India’s largest export market, with shipments valued at $86.5 billion in FY25.
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India is gearing up to meet any outcome, including a continuation of the 50 per cent tariffs unilaterally imposed by the US, while it is simultaneously leaving the door open for negotiations on the Bilateral Trade Agreement (BTA) with the Americans.
High-level parleys in the government in the last 24 hours were aimed at evolving a multi-pronged strategy to meet the eventuality of very high tariffs on Indian goods exported to the US.
Key pillars
“The main pillars of the strategy, piloted by the Commerce Department, include fine-tuning the export promotion mission for exporters; promoting market diversion; and planning import substitution to increase domestic demand for exported goods,” a source close to the development told businessline.
At the same time, the government does not want to take immediate retaliatory action against the US for its unilateral tariffs as BTA negotiations are on and there is still a hope of resolution through talks, the source added.
“India wants to give trade negotiations a chance and would meet the US team that will be in New Delhi on August 25 for the next round of talks. Hopefully, some progress would be made. But India is clear that it cannot compromise on its red lines which include sensitive farm products, dairy sector and GM crops and would stick to it,” an industry source said.
US President Donald Trump announced 25 per cent reciprocal tariffs on India, higher than many competing countries, to be implemented from August 7. On Wednesday, he imposed an additional 25 per cent tariff on India for buying oil and arms from Russia, which would be applicable from August 27.
Elaborating on the multi-pronged strategy, the source said the ₹2,240 crore export promotion mission announced in the Budget could have tailor-made provisions to meet the specific needs of the exporters hit by US tariffs.
Mission tweaked
The mission, which is likely to include schemes, such as a variant of the interest equalisation scheme and market promotion funds for exporters, could be tweaked to be more focussed towards addressing needs of sections most affected by the tariffs, sources said.
On plans for market diversion, the source said efforts had already started to scrutinise what products were going to the US and where it could be diverted
“Based on the premise that the current disruption in world trade was creating new opportunities, the Commerce Department is helping the industry identify newer markets and is also analysing what kind of help can be provided to help them explore and establish themselves there,” the source said.
The third pillar of the strategy is import substitution, which is basically examining if exporters who lose their market share in the US could be compensated through more domestic demand by way of import substitution. The Commerce Department will work with other line ministries to give a more concrete shape to the strategy and schemes would be worked out accordingly, the source added.
The US is India’s largest export market, with shipments valued at $86.5 billion in FY25. But it is still a little less than a fifth of India’s total goods exports of $437.2 billion in FY 25.
POINTERS
*Multi-pronged strategy to help deal with Trump tariffs
*Export promotion mission schemes to be tailored to meet needs of tariff-hit exporters
*Govt to help industry diversify markets beyond US through support measures
*Import substitution to be pushed to increase domestic demand for exporters
*No retaliation against US yet as India wants the bilateral trade pact talks to succeed
Published on August 7, 2025
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