New Delhi: The government made it clear on Friday that its relationship with the United States continues to be an integral part of its foreign policy, even as it faces an increasingly tense period with regard to trade links with the new nation.
According to a ministerial response given to the Lok Sabha on Friday, India is making efforts for a balanced and mutually advantageous multi-sectoral India-US Bilateral Trade Agreement. It aims at resolving matters relating to tariffs as well as developing a structure for cooperation.
Although there are no immediate reactions from the government regarding retaliatory duties, it has maintained that all options remain open and that it would be compelled to undertake compensatory actions if necessary for safeguarding national economic objectives. Trade tension escalated as a result of the unveiling of various duties on trade by Washington in mid-2020 on account of national security and foreign policy considerations.
The MEA, in its written response to a question posed in the Lok Sabha, listed out the various steps that have been taken and the resultant effect on Indian exporters. The government has been conducting extensive consultations with various sectors that have conveyed their concerns about competitive disadvantages and supply chain risks, as well as market share erosion in the US market, which is India’s biggest market.
To mitigate these effects, various support tools have been initiated by the government. These include efforts under the newly launched Export Promotion Mission, trade facilitation arrangements by the Reserve Bank of India, enhancements in export credit guarantees, and efforts for better use of existing Free Trade Agreements. At the same time, new Free Trade Agreements with focus geographies have been put on a fast track as a strategy for diversification of India’s export basket and dependence on no single geography exposed to unilateral changes in tariffs.
The US initially imposed reciprocal tariffs on July 31, this year, pursuant to the International Emergency Economic Powers Act (IEEPA), on imports from most world major economies, among them India. However, things took a turn on August 27, 2025, with an additional 25 per cent ad valorem duty imposed on specific goods from India based on India’s continued imports of Russian crude oil. These were imposed on top of previous measures based on Section 232 of the US Trade Expansion Act and will impact additional goods such as steel, aluminium, copper, upholstered furniture, kitchen cabinets, softwood, and autos.
Despite these restrictions, it has been made clear that major export commodities like Pharmaceuticals, Oil Products, Agriculture Products, Information Technology Services, Precious Metals, Critical Minerals, Electronics, and Plastics are not impacted and have access to the US market without any additional tariffs.
Despite that, the big picture here remains very important. According to 2024 trade data, NON-INFO merchandise exports exceeding $47.2 billion, or more than half of India’s total exports of $86.4 billion, qualify for higher duties on various commodity groups. Despite being an extremely important strategic partner, there are worries about the future course of trade.
The MEA emphasised that there is consistency within India’s foreign policy strategy of maintaining itself as a nation with strategic autonomy, and it continues to focus on diversification of trade and ensuring competitiveness. Although there are no set timelines yet, it has been indicated that it will start seeing some progress towards stabilisation soon. It has assured parliament that there will be a progress report made available once some developments are reached in the ongoing talks.
It would be a pivotal moment for the trade diplomacy of India. The course that these talks will soon take will not only be important for trade relations between two large democracies but will also have implications for global trade politics because of the rising geopolitical uncertainties.