India hopes for a breakthrough in trade talks with the US, considers support to exporters

India and the US will continue negotiations for a bilateral trade talk that could be finalised in the coming months, but the government is also looking at additional measures to support exporters. This comes after the US announced a 25% reciprocal tariff and an unspecified penalty on Indian exports that will be applicable from August 7.

Over the weekend, Commerce and Industry Minister Piyush Goyal held discussions with exporters and associations where the fallout of the US tariff was discussed. Exporters are understood to have sought government support and extension of several schemes. According to sources, the commerce ministry is understood to be looking at these proposals and will work out some support measures.

“For now, it is still wait and watch to assess how the US tariffs are implemented. There is also no clarity on the penalty that was announced by the US,” said a source.

Exporters are understood to have urged the government to extend fiscal incentive such as interest subsidy and extension of the RoDTEP scheme (Remission of Duties and Taxes on Exported Products), RoSCTL (Rebate of State and Central Taxes and Levies), timely payment of dues, and a direct shipping line to the US.

Meanwhile, further negotiations with the US are set to take place later this month on the BTA. According to sources, India is continuing its engagement with the US on the proposed trade agreement and is hopeful that a deal will be worked out in coming months. However, it will not water down its stance on the issues of agriculture and dairy but could throw in some additional provisions to try and sweeten the deal.

India’s 25% tariff is one of the highest that the US has levied on Asian countries, second only to that of China’s 30% tariff. The new US tariff regime excludes pharmaceuticals, energy products, critical minerals, and semiconductors.

“But outside these, Indian goods are under pressure. As a result, India's exports to the US—currently its largest export market—are projected to decline by nearly 30%, falling from $86.5 billion in FY25 to around $60.6 billion in FY26,” said a report by GTRI.

In a new report, it has suggested a five-point action plan for the Indian government to stabilise and future-proof exports including measures such as reviving the interest equalisation scheme and operationalising a National Trade Network to simplify compliance and export onboarding.