India-US trade deal: As talks between India and the United States continue for an interim trade agreement, India Inc's plans in America remain uncertain. Corporates are waiting to finalize plans until they know what tariff rates will apply to India if an interim agreement is reached with the Donald Trump administration.
According to a report, extended trade negotiations between India and the United States are having an impact on Indian businesses, including export orders, operational strategies, and the acquisition of new American clients.
Key Highlights
- Indian firms delay U.S. expansion and new orders amid uncertainty over Trump’s proposed 26% tariffs.
- Trump signals interim India deal below 20% tariffs ahead of August 1 deadline, boosting negotiations.
India and the United States continue to negotiate bilateral trade agreements. The US administration extended its 90-day suspension of reciprocal tariffs for most trading partners to August 1 from July 9. On April 2, the US suggested a 26% tariff rate for India.
Trade Deal: India Inc. in Hold Mode
According to industry leaders, global companies are being cautious as they await the outcome of trade negotiations. This cautious approach is evident in key industries such as electronics, textiles, apparel, seafood, and gems and jewellery.
Leading electronics manufacturers, including Bhagwati Products (owned by Micromax), Karbonn Group, and Dixon Technologies, have stated that while existing US exports will continue, new orders will be suspended pending the outcome of trade talks.
"Prospective clients who wanted to manufacture in India for the US are in a wait-and-see mode, expecting clarity on where India stands relative to China and Vietnam in terms of US tariffs," Atul Lall, managing director at Dixon Technologies, told. Dixon produces Motorola smartphones for export to the United States.
Karbonn Group managing director Pardeep Jain acknowledged the current high level of uncertainty in the US market. "Brands have stated unequivocally that if there is no significant duty difference between India and China, they are unlikely to shift manufacturing to India." "Discussions are ongoing," he said.
Trade deal uncertainty is also affecting India's long-term export commitments in the gems and jewellery sector, particularly during the Christmas and end-of-year retail seasons.
"The process of placing orders for Christmas usually begins in June from the JCK Show of jewelry at Las Vegas; first with sample line orders, followed by full orders in September-October," said Sabyasachi Ray, executive director of The Gems and Jewellery Export Promotion Council, according to the financial daily.
According to Ray, American buyers are discussing prices, expecting lower demand if Indian jewellery prices rise due to higher tariffs. He mentioned that some buyers are discussing how to distribute the additional costs.
Chandrima Chatterjee, secretary general of the textile industry's representative body, CITI, expressed short-term optimism that India would secure a favorable deal with competitive tariffs when compared to its main competitors.
Also Read: Trump Claims India's Trade Strategy Mirrors US-Indonesia Agreement
"However, this optimism may not completely translate into orders in the medium term due to the vague scenario about applicable product specific tariffs that will unfold," according to her. "There's cautious optimism. Buyers are holding back on large orders because sectoral or category-specific tariff rates may vary significantly."
The seafood export sector has seen a drop in orders recently, with international buyers questioning suppliers' willingness to accept additional tariff costs. "Exports have slowed over the last three weeks due to a lack of new orders," said Pawan Kumar G, president of the Seafood Exporters' Association of India.
