India’s exports to the United States, its largest export market, declined by 20% in September 2023 and nearly 40% over the past four months. This decrease occurred following the implementation of significant tariffs by the US, which began on August 27. These tariffs include a 50% rate on goods from India, with an additional 25% penalty for India’s continued procurement of oil from Russia.
Ajay Srivastava from the Global Trade Research Initiative (GTRI) noted that the US has become India’s most adversely affected market due to these tariff changes. Shifts in trade patterns are evident, with shipments to the US experiencing a continuous decline over four months, dropping from $8.8 billion in May to $5.5 billion in September.
The tariffs have particularly impacted labor-intensive sectors, including textiles, gems and jewellery, engineering goods, and chemicals. The decline in exports has also contributed to India’s widening trade deficit, which reached a 13-month high of $32.15 billion in September. However, some of this reduction has been mitigated by increased trade with other countries, such as the UAE and China.
Trade negotiations between India and the US resumed last month after a period of stagnation, with talks ongoing. An Indian delegation is currently in the US to discuss trade agreements. Recent statements from US officials indicate that Indian Prime Minister Narendra Modi has agreed to reduce Russian oil purchases, aligning with US efforts targeting economic sanctions against Russia.
Despite negotiations, significant issues remain unresolved, especially concerning access to India’s agricultural and dairy markets. The US has advocated for greater access to these sectors for years, viewing them as valuable opportunities within India’s economy. The bilateral trade between India and the US reached $190 billion in 2024, with a shared goal to increase this figure to $500 billion.
Source: https://www.bbc.com/news/articles/c70jw0nylrgo?at_medium=RSS&at_campaign=rss