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India’s Counter to 50% U.S. Tariffs: What New Delhi Is Doing—and How This Can Still Be Resolved

The United States’ decision to lift duties on a wide swath of Indian imports to 50% took effect today, citing India’s continued purchases of discounted Russian crude. The hike, which follows an additional 25% layer announced earlier this month, threatens labour-intensive export sectors such as textiles, gems & jewellery, leather, furniture and select chemicals. Pharmaceuticals and a few strategic categories appear less affected for now.losses.

What countermeasures is India taking?

1) Fast-track export diversification (beyond the U.S.)
The Commerce Ministry is working with Export Promotion Councils to pivot shipments—especially textiles, apparel, leather, gems & jewellery—toward markets covered by recent FTAs or active negotiations (UAE, U.K., Australia, Japan, South Korea, parts of the EU). Officials say outreach and market-access support will be stepped up to cushion hit sectors.

2) Targeted financial assistance to affected exporters
A senior official indicated that financial support measures are being readied for firms directly hit by the 50% wall, aimed at working-capital relief and order protection in the near term. Details are being coordinated with industry bodies.

3) Keeping the diplomatic channel open
Despite the escalation, both capitals remain in contact. New Delhi has termed the duties “unfair, unjustified and unreasonable” yet emphasized that it will “take all actions necessary to protect national interests,” while signaling willingness to talk. U.S. officials have also indicated tariffs could be revisited if a mutually acceptable trade package is struck.

4) Legal options under the WTO
India has already put Washington on notice this year over U.S. metal duties and has the option to formally challenge the broader tariff action and/or seek compensation. These steps don’t yield instant relief but preserve leverage and can underpin negotiated outcomes.

5) Contemplating reciprocal duties (calibrated retaliation)
New Delhi has explored counter-duties on select U.S. products to mirror losses from U.S. actions—used sparingly to avoid a spiral, but kept ready as leverage if talks stall.

Why the 50% tariff matters

The U.S. is India’s largest goods-export market (about $87–$88 billion in 2024). A sustained 50% rate risks order cancellations, factory downtime in clusters like Tiruppur/Noida/Surat, and near-term growth drag, even if domestic cushioning helps. Private-sector forecasters warn of pressure on corporate earnings and GDP if the duties persist.

A realistic path to de-escalation

A. Oil-linked, phased rollback: A timetable tying partial tariff relief to measurable reductions—or transparency—around India’s Russian crude intake (without forcing supply shocks) could be the bridge. The White House has hinted openness to lower duties if a broader deal emerges.

B. Sectoral carve-outs & quotas: Carve-outs for critical or low-substitution goods (e.g., pharma inputs), temporary tariff-rate quotas for labour-intensive lines, and mutual SPS/technical standard alignment could protect the most vulnerable jobs while talks proceed. (Inference based on current exemption patterns and past practice.)

C. Mini-deal building blocks:

Facilitate agri/diary access and digital trade norms where feasible.

Restore elements of preferential access (GSP-like benefits) tied to verifiable reforms.

Synchronize with ongoing FTA tracks (U.K., EU) to minimize diversion and compliance friction.

D. WTO track in parallel: File/advance a dispute to anchor negotiations in rules, while using good-offices/mediation to speed settlement.

Bottom line

India’s initial playbook is diversify markets, support exporters, keep talking, and reserve the right to retaliate within WTO rules. A phased, oil-linked unwind plus targeted carve-outs offers the most plausible off-ramp that protects Indian jobs and U.S. inflation optics alike. The next inflection point: whether both sides frame a mini-deal that pauses escalation before supply chains lock in the new normal.