India, US framework for trade pact provides tariff certainty
The finalisation of a framework for signing a trade pact between India and the US has provided an immediate certainty and predictability to domestic exporters at the tariff front, experts say.As per the framework, the US will reduce reciprocal tariffs on India to 18 per cent from 25 per cent. The US has already removed the additional 25 per cent punitive tariff which it imposed on India for buying Russian crude.
They said that the tariff on India is the lowest compared to its competitor nations such as China, Indonesia, Vietnam and Bangladesh.Rudra Kumar Pandey- Partner, Shardul Amarchand Mangaldas Co, said the framework provides much-needed operational clarity on the recent tariff rationalisation.
The framework explicitly confirms that a reciprocal tariff rate of 18 per cent will apply across several key Indian export sectors, including textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home decor, artisanal products, and selected machinery segments, he said. “For exporters, this delivers immediate certainty and predictability. Importantly, an 18 per cent tariff places India at a relative advantage vis-a-vis competing exporters such as Bangladesh, Thailand, Indonesia and China, where the headline US tariff is comparatively higher,” Pandey said. As a result, he said, incremental market-share gains for Indian exporters in these segments are reasonably expected.
He added that India’s stated intention to purchase $500 billion of US goods over five years — across energy, aircraft and aircraft parts, capital goods, and technology products — should be viewed as a strategic import commitment aligned with India’s infrastructure expansion, aviation growth, and digital-economy ambitions.Gulzar Didwania, Partner, Deloitte India, also said that the focus on the removal of non-tariff barriers from both sides will further facilitate free trade between the two countries.“Overall, a very positive development in the current geopolitical situation and will overall benefit Indian exporters in the immediate as well as long run,” Didwania said.
Hailing the pact, Aqeel Panaruna, Chairman, Florence Shoe Company and Director, Grand Atlantia Panapakkam SEZ Pvt Ltd, said the India-US trade agreement marks a major boost for India’s footwear and leather sector.Earlier, Indian footwear exports to the US faced tariffs of up to 50 per cent, impacting competitiveness and long-term sourcing.“The new agreement is expected to rationalise tariffs, restore market access, and enable Indian manufacturers to scale exports with confidence,” Aqeel said.
Against this backdrop, he said, “We plan to expand our Rs 2,500-crore joint venture at Panapakkam, Tamil Nadu, with our Taiwanese partners — among the world’s second-largest producers of athletic footwear,” he added.The facility, currently under construction, is scheduled for completion by April this year, with further investments already in the pipeline, alongside the continued growth of our family-owned leather business, Aqeel said.
