U.S. President Donald Trump and Indian Prime Minister Narendra Modi shake hands as they attend a joint press conference at the White House in Washington, D.C., U.S., February 13, 2025. / Reuters/Kevin Lamarque

India said on April 3 it was studying the impact of the 27 percent tariff slapped by the U.S. on its imports and vowed to push for a trade deal this year, signalling a conciliatory tone despite failing to get relief from President Donald Trump's trade policy.

New Delhi's response came hours after Trump announced the drastic tariffs that piled more stress on an ailing global economy and sent world stock markets and oil prices tumbling.

While Trump said Indian goods will face a 26 percent tariff, the White House executive order put the rate at 27 percent. India's trade ministry too put the rate at 27 percent, citing the executive order.

A baseline 10 percent baseline tariff starts on Saturday before the remaining, higher reciprocal tariff takes effect from April 9.

India's trade department is "carefully examining the implications" of the U.S. announcement and also holding talks with Indian industry and exporters on their assessment of the tariffs, a trade ministry statement said.

"The department is also studying the opportunities that may arise due to this new development in U.S. trade policy," it said, and referred to the agreement between Trump and Indian Prime Minister Narendra Modi in February to work on the first phase of a trade deal by autumn 2025.

"The ongoing talks are focused on enabling both nations to grow trade, investments and technology transfers," it said, referring to negotiations between the two sides. "We remain in touch with the Trump administration on these issues and expect to take them forward in the coming days."

Trump has slapped higher duties on other countries, including 34 percent on China on top of a 20 percent tax announced earlier, and 46 percent on Vietnam.

The relatively lower tariffs imposed on India calmed equity markets.

India's benchmark share indexes, the Nifty 50 and the BSE Sensex, were down 0.3 percent each at open, lower than the 1.5 percent to 3 percent losses seen across other Asian markets. The rupee fell as much as 0.3 percent to 85.75 against the dollar in early trade but recovered to 85.45.

India gains a natural competitive advantage in several key sectors due to the relatively lower tariffs imposed, research firm Global Trade Research Institute said in a note.

Nearly $14 billion worth of electronics products and over $9 billion worth of gems and jewellery are among the top sectors to be hit by the U.S. tariffs.

The Trump administration, however, exempted pharmaceutical exports from the tariff bringing cheer to India's pharma industry. The U.S. accounted for nearly a third of India's pharmaceutical exports - mainly cheaper versions of popular drugs - with sales of about $9 billion last fiscal year.

HUGE TRADE DEFICIT

Shares of Indian drugmakers rose nearly 5 percent in early trade on Thursday in contrast to the drop in the broader stock market.

India's export competitiveness would be less impacted than key rivals due to its position in the middle of the tariff rates, said the country's industry bodies, Assocham and the Federation of Indian Export Organisations.

The duty of 27 percent was based on tariff and non-tariff barriers including currency manipulation, the Trump administration said.

The tariffs would remain in effect until Trump determined that the "threat posed by the trade deficit and underlying non-reciprocal treatment is satisfied, resolved, or mitigated," the White House statement said.

The U.S. has a trade deficit of $46 billion with India.

The reciprocal tariff will add pressure on Modi, who counts himself among Trump's friends, to find ways to get India off the hook.

Last week Reuters reported that New Delhi is open to cutting tariffs on U.S. imports worth $23 billion to mitigate the impact on its exports in sectors like gems and jewellery, pharmaceuticals and auto parts.

Modi's administration has taken a number of steps to win over Trump by lowering tariffs on high-end bikes, bourbon and dropping a tax on digital services that affected U.S. tech giants.

Before the reciprocal announcement, the simple average U.S. tariff rates were at 3.3 percent, compared with India's 17 percent, the White House said.

Ajay Sahai, director general at the Federation of India Export Organisations, said the reciprocal tariff on India was lower than key competitors like Vietnam and Bangladesh, which could help Indian apparel and footwear sectors.

 

Trump imposes a 26% tariff on India—brace for turmoil in the stock market. pic.twitter.com/T8wnnosMsC

— Vinayak Gautam (@wisebull_20) April 3, 2025