New Delhi: In response to the recent 25% tariffs imposed by former US President Donald Trump on Indian exports, particularly in the textiles and leather sectors, India has decided to accelerate Free Trade Agreement (FTA) negotiations with the European Union (EU), Peru, and Chile.
According to officials in the commerce ministry, an urgent virtual meeting was held on July 31 with major leather and textile exporters. The aim was to assess the potential impact of the US move, which now threatens over $10 billion worth of annual shipments from India to the United States.
“We are betting on speeding up talks with EU, Peru, and Chile, because some of our exports can be absorbed by these nations,” said an official familiar with the matter.
Tariffs Now at 25% for Key Indian Exports
Earlier, Indian goods in these sectors faced a 10% tariff in the US. The sudden hike to 25%—as part of Trump’s ongoing trade protectionism—could severely dent the competitiveness of Indian products in one of its top export markets.
Trump has accused India of maintaining “strenuous and obnoxious” trade barriers while keeping its own market closed to US goods.
India Eyes Export Diversification
To counter this development, Indian authorities are pushing for faster progress on long-pending FTAs with the EU, Chile, and Peru, hoping that improved market access in these regions can absorb some of the diverted export volume.
While FTA talks with the EU have been in limbo for years due to disagreements on tariffs and regulations, recent developments may provide the necessary momentum for revival. Discussions with Peru and Chile have also seen renewed interest, especially for labour-intensive goods where these Latin American countries offer growing demand.
Quick Take
India’s proactive approach to trade diversification highlights its focus on reducing reliance on the US market, especially for vulnerable sectors like textiles and leather. The immediate outreach to exporters reflects the government’s intent to shield domestic industries from geopolitical shocks and shifting global trade policies.
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