THEBUSINESSBYTES BUREAU
NEW DELHI, JULY 25, 2026
In a significant relief for Indian exporters, the government
on Saturday said the United States has placed India in the lower 10 per cent
tariff bracket under the final measures announced under Section 301 of the US
Trade Act, 1974, while reaffirming its commitment to fast-track negotiations
for the proposed India-US Bilateral Trade Agreement.
The United States Trade Representative (USTR) on July 23
unveiled the final tariff measures following its investigation into the acts,
policies and practices of 60 economies, including India, concerning the
prohibition and enforcement of imports allegedly produced through forced
labour. Under these measures, an additional 10 per cent import duty on
specified Indian goods came into effect from July 24.
The latest decision marks an improvement from the USTR’s
earlier proposal, which had sought to impose a steeper 12.5 per cent tariff on
Indian exports. The new levy also replaces the temporary 10 per cent tariffs
that had been in force for 150 days since February 24.
The Ministry of Commerce and Industry said India remained
actively engaged with the USTR throughout the investigation, submitting
detailed written responses, participating in public hearings, and holding
extensive in-person consultations. These sustained diplomatic and trade
efforts, the ministry said, played a key role in ensuring that India was placed
in the lower tier of additional tariffs.
According to the ministry, the lower tariff placement
provides Indian exporters with a competitive advantage over many other
economies covered under the investigation, particularly in key export-oriented
sectors.
The government also highlighted that a substantial portion of
India's exports to the United States—valued at USD 87.31 billion in
2025-26—will continue to remain unaffected by the additional duty. These
include major export categories such as generic pharmaceuticals, smartphones,
and several other specified products that have been kept outside the ambit of
the Section 301 tariffs.
In addition, products already subject to Section 232 duties,
including steel, aluminium and auto parts, will not attract the new 10 per cent
levy. These goods are already covered under separate US national security
tariffs ranging between 25 per cent and 50 per cent, over and above the normal
Most Favoured Nation (MFN) duties. According to trade think tank GTRI, these
products account for nearly 8 per cent of India's exports to the US.
Owing to these exemptions, the Commerce Ministry estimated
that around 45 per cent of India's exports to the United States will remain
outside the scope of the additional 10 per cent Section 301 duty. The remaining
55 per cent of exports will face the new levy, although India continues to
enjoy a comparatively lower tariff incidence than most other economies covered
under the USTR investigation.
The government described the outcome as a positive
development that strengthens India's relative position in the US market despite
the broader tariff action.
Reiterating its commitment to deepening economic ties with Washington, the ministry said the government would continue working closely with the United States for the early conclusion of the proposed India-US Bilateral Trade Agreement, which was announced on February 2, 2026, and reaffirmed in the Joint Statement issued on February 7, 2026.
The latest tariff decision comes at a crucial juncture in India-US trade relations, with both countries seeking to expand bilateral commerce while addressing market access issues through an ambitious trade pact that is expected to further boost investment and economic cooperation.
