India and the US to hold fast-tracked trade talks in Delhi amid 50% tariff hike on Indian goods

India and the US will meet for trade negotiations in Delhi on Tuesday, only weeks after Donald Trump raised duties on Indian goods, a move that helped push the country’s exports to a nine-month decline in August.

India and the U.S. will “fast-track” the discussions, said Rajesh Agarwal, India’s chief negotiator in the commerce ministry. He spoke at a briefing held alongside the announcement of the latest trade data, without sharing further details. Brendan Lynch, the United States trade delegate for South Asia, is scheduled for a one-day trip to New Delhi, according to Agarwal.

Official numbers showed merchandise exports fell to 35.10 billion U.S. dollars in August from 37.24 billion U.S. dollars in July. The trade deficit reduced to 26.49 billion U.S. dollars from 27.35 billion U.S. dollars in the prior month.

Washington imposed an extra 25% duty on Indian products beginning August 27, lifting the total tariff on Indian exports to 50 percent, ranking among the top rates faced by any United States partner. Sales to the U.S. market slipped to 6.86 billion U.S. dollars in August from 8.01 billion U.S. dollars in July. 

For the April-August period, India’s shipments to the United States reached 40.39 billion U.S. dollars. Officials said the full hit from the higher duties will show up in next month’s figures, since the additional levy took effect toward the end of August.

India’s trade gap declined in August while exporters prepared for the impact of the 50% U.S. tariff. According to economists in a Bloomberg survey, the deficit was 26.49 billion U.S. dollars, compared to the 24.8 billion U.S. dollars shortfall forecast. This followed an eight-month peak of 27.35 billion U.S. dollars in July. 

Imports dropped 10.1 percent year-on-year in August to 61.59 billion U.S. dollars, while exports totalled 35.1 billion U.S. dollars, up 6.7 percent from a year earlier.

The August data is the first full set of trade numbers since the United States announced a 25% levy on Indian goods on August 7 and doubled it 20 days later, citing New Delhi’s purchases of Russian oil. 

The duties rank among the steepest globally and risk eroding the price edge of Indian products against rivals in Bangladesh and Vietnam.

However, there were signs of a thaw last week as President Trump and PM Modi agreed to restart trade negotiations.

India advances EU trade talks, plans import substitution strategy

India is also pushing ahead with a trade agreement with the European Union. The next phase of negotiation is planned for October 6th-10th.

The United States is India’s largest export destination, and the new tariff regime is expected to affect labour-intensive categories such as jewelry and textiles. Many exporters sped up deliveries before the higher duties kicked in. 

According to the data, outbound shipments to the U.S. reached 40.39 billion US dollars from April to August, compared with 34.21 billion US dollars in the same period the previous year.

To cut reliance on imports, the government has marked out around 100 products in which domestic manufacturing could be scaled up. Officials say the plan is part of a broader effort to steady trade flows while talks proceed with major partners, including the United States and the European Union.

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