30 September 2025 : The Commerce Ministry of India has cautioned that the recently imposed and proposed U.S. tariffs on certain goods could have a long-term impact on trade, highlighting potential risks to exporters, industries, and bilateral relations. The ministry made this observation in a report to the Parliamentary Accounts Committee (PAC), which is reviewing the implications of changing global trade policies.
Concerns Raised by Commerce Ministry
According to the submission, the ministry believes that higher U.S. tariffs could:
- Disrupt export growth for Indian manufacturers, particularly in sectors like steel, aluminum, and textiles.
- Increase costs for U.S. buyers, which could indirectly impact demand for Indian goods.
- Affect India-U.S. trade balance, given that the U.S. remains one of India’s largest export markets.
The ministry also cautioned that even if tariffs appear sector-specific today, their long-term ripple effects could influence allied industries and employment in India.
India-U.S. Trade Ties
The United States is India’s single largest trading partner, with bilateral trade crossing $120 billion in recent years. Indian exports to the U.S. include IT services, textiles, gems and jewelry, engineering goods, and pharmaceuticals.
The report highlighted that while services exports may remain resilient, goods trade faces the highest risk under tariff hikes. This creates uncertainty for thousands of exporters, especially small and medium enterprises (SMEs).
Impact on Key Sectors
- Steel and Aluminum: Previous U.S. tariffs under Section 232 already impacted India’s metals industry. Any continuation or expansion of such measures could strain exports further.
- Textiles and Apparel: Indian apparel exporters rely heavily on U.S. demand. Higher tariffs may push buyers to shift to other markets like Vietnam or Bangladesh.
- Pharmaceuticals: Though largely unaffected by tariffs so far, regulatory scrutiny and potential duties could pose risks if trade tensions escalate.
Long-Term Effect on Exporters
The ministry noted that prolonged tariffs may force Indian exporters to:
- Diversify into alternative markets such as Europe, Africa, or Southeast Asia.
- Re-negotiate supply chain contracts.
- Invest in cost-reduction and innovation to remain competitive despite tariff barriers.
However, it stressed that building new markets takes time, and sudden tariff shocks could disrupt the growth momentum of Indian industries.
PAC Discussion and Recommendations
The Parliamentary Accounts Committee (PAC) is expected to hold follow-up sessions to review the ministry’s observations. Some members have reportedly suggested:
- Exploring trade negotiations with the U.S. to seek relief on select tariff lines.
- Increasing government support through export incentives, credit facilities, and insurance.
- Promoting self-reliance in vulnerable industries, so domestic producers can absorb shocks.
Government Strategy Going Forward
Officials have underlined India’s focus on:
- Diversification: Expanding trade ties with Europe, ASEAN nations, and Africa to reduce dependence on the U.S.
- Free Trade Agreements (FTAs): Accelerating negotiations with key partners such as the UK and EU to secure preferential access.
- Supporting exporters: Offering credit support and logistical assistance to industries that may be hit hardest by tariff hikes.
The ministry also emphasized the need for continuous dialogue with U.S. authorities, given that India and the U.S. share strong strategic ties across defense, energy, and technology.
Expert Views
Trade experts believe that while India can manage short-term shocks, the long-term impact could reshape trade dynamics.
Dr. Rajiv Bansal, a trade economist, said:
“Tariffs may not always immediately reduce trade, but over years they weaken competitiveness, push companies to other destinations, and force exporters to adapt in less profitable ways.”
He added that India’s push towards self-reliance (Atmanirbhar Bharat) could help mitigate risks, but global competitiveness will remain essential.
Conclusion
The Commerce Ministry’s message to the PAC reflects a growing concern about how U.S. trade policies could reshape India’s export landscape. While India is preparing strategies to adapt, policymakers acknowledge that tariffs are not just short-term hurdles—they can have long-lasting effects on competitiveness, employment, and bilateral trade relations.
Summary
The Commerce Ministry told India’s Parliamentary Accounts Committee that U.S. tariffs will have long-term trade impacts, affecting exports, employment, and competitiveness, while urging diversification, FTAs, and ongoing U.S. dialogue.