FIEO Warns of Impact from 26% US Tariffs on Indian Exporters Amid Trade Negotiations

The Federation of Indian Export Organisations (FIEO) has expressed concerns over the 26 per cent tariffs imposed by the US on India, as announced by President Donald Trump. Ajay Sahai, Director General and CEO of FIEO, noted that while these tariffs will impact Indian businesses, the country is in a relatively better position compared to others.

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President Trump highlighted India's high tariffs on American goods while announcing reciprocal tariffs on several countries. He presented a chart showing the tariffs imposed by nations like India, China, and the European Union. According to this chart, India charges 56 per cent tariffs, including currency manipulation and trade barriers, prompting the US to impose a 26 per cent "discounted reciprocal tariff" on India.

Impact on Trade Relations

Sahai remains hopeful about the ongoing negotiations for a bilateral trade agreement (BTA) between India and the US. He believes that finalising this agreement soon could alleviate some of the pressures from these new tariffs. "We have to assess the impact, but looking at the reciprocal tariffs imposed on other countries, we are in a lower band," Sahai stated.

The US has been India's largest trading partner from 2021-22 to 2023-24. It accounts for approximately 18 per cent of India's total goods exports and 6.22 per cent of imports. The bilateral trade between the two nations stands at 10.73 per cent.

Trade Surplus and Key Exports

India enjoys a trade surplus with the US, which was USD 35.32 billion in goods for 2023-24. This surplus was USD 27.7 billion in 2022-23 and USD 32.85 billion in 2021-22. In previous years, it was USD 22.73 billion in 2020-21 and USD 17.26 billion in 2019-20.

In 2024, India's primary exports to the US included drug formulations worth USD 8.1 billion and telecom instruments valued at USD 6.5 billion. Other significant exports were precious stones at USD 5.3 billion, petroleum products at USD 4.1 billion, jewellery at USD 3.2 billion, cotton garments at USD 2.8 billion, and iron and steel products at USD 2.7 billion.

Imports from the US

India's imports from the US included crude oil worth USD 4.5 billion and petroleum products valued at USD 3.6 billion in 2024. Other notable imports were coal and coke at USD 3.4 billion, cut diamonds at USD 2.6 billion, electric machinery at USD 1.4 billion, aircraft parts at USD 1.3 billion, and gold also at USD 1.3 billion.

Despite these challenges, Sahai emphasised that India is better positioned than competitors like Vietnam and China regarding these tariffs: "We are much better placed compared to our key competitors such as Vietnam, China, Indonesia, Myanmar, etc."

The ongoing negotiations for a BTA could provide relief from these tariffs if concluded swiftly. The focus remains on assessing the impact while hoping for a favourable outcome from these discussions.