India’s strong domestic demand and a smaller-than-expected fall in exports are providing New Delhi with increased flexibility in trade talks, despite U.S. tariffs of up to 50%. Official data shows that India’s exports to the U.S. dropped 8.6% year-on-year in October to USD 6.3 billion—the second month under the heightened tariff regime. The decline was milder than the 12% fall in September, indicating that the impact may be stabilizing.
Although trade negotiations with the United States have moved slowly, other Asian economies such as Japan and South Korea have already secured tariff-reduction agreements with Washington. India, however, has repeatedly stated it will not rush into any deal. While sectors like textiles have experienced lower orders, the broader economic impact has remained contained, giving negotiators room to pursue a balanced agreement.
Sources familiar with the discussions say Washington is expected to withdraw the 25% tariff linked to India’s purchases of Russian oil, with talks likely shifting toward a uniform tariff of around 15%. In return, New Delhi is preparing to lower import duties on more than 80% of goods while protecting sensitive segments such as agriculture.
To support exporters, the Indian government has reached new trade agreements with the UK, UAE, and Australia, reduced duties on raw materials, and announced a USD 5.1 billion package aimed at strengthening export sectors. Exporters have compensated for reduced U.S. demand by expanding into African and European markets and retaining American buyers through discounts and flexible delivery schedules.
According to Ajay Sahai, Director General of the Federation of Indian Export Organisations, apparel and footwear producers are absorbing up to 20% of costs to keep U.S. clients. Targeted relief such as short-term loan moratoriums has helped sustain liquidity.
Rising domestic demand fueled by tax cuts on hundreds of consumer items is also strengthening export competitiveness. Reductions in duties on inputs such as man-made fibres have further supported textile exporters. N. Thirukkumaran, General Secretary of the Tirupur Exporters’ Association, said garment exporters are offering discounts of 10–20% depending on the style and shipment size.
India’s economy grew 7% year-on-year in the July–September quarter and is projected to expand 6.8% in the current fiscal year. Analysts say this momentum is helping cushion the impact of U.S. tariffs and strengthen India’s negotiating position.
