‘US Tariffs Unfortunate, Both Countries Should Work Towards Long-Term Solution’: India Inc | Economy News
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Industry body FICCI says it hopes the hike is a “temporary phenomenon” and urges both countries to work towards a long-term solution.
India Inc has expressed disappointment over US President Donald Trump’s announcement to impose a 25% tariff along with an unspecified penalty on Indian goods, effective August 1.
India Inc has expressed disappointment over US President Donald Trump’s announcement to impose a 25% tariff along with an unspecified penalty on Indian goods, effective August 1, calling the move unfortunate and a potential setback to bilateral trade.
Industry body FICCI, however, said it hopes the hike is a “temporary phenomenon” and urged both countries to work towards a long-term solution.
“While this move is unfortunate and will have a clear bearing on our exports, we hope that this imposition of higher tariffs will be a short-term phenomenon and that a permanent trade deal between the two sides will be finalised soon,” said FICCI President Harsha Vardhan Agarwal.
He added that there is “a lot our two countries can achieve together” and expressed confidence that the “detailed deliberations currently underway” will lead to “beneficial outcomes for both countries”.
India and the US have been engaged in discussions for a Bilateral Trade Agreement (BTA) since the beginning of the year. Agarwal indicated that while the Indian government has been constructive, it “has not given in” to certain US demands that are not aligned with India’s national interest.
The Confederation of Indian Textile Industry (CITI) also flagged concerns, stating that the new tariffs pose a “stiff challenge” for the textile sector. However, it expressed optimism that the issue will be resolved once the BTA is in place. The US is India’s largest market for textiles and apparel.
Between January and May 2025, Indian textile and apparel exports to the US stood at $4.59 billion, up more than 13% from $4.05 billion in the same period last year.
PHDCCI President Hemant Jain acknowledged the negative impact on MSMEs but struck a hopeful note: “With global buyers looking to de-risk from overdependence on select geographies, India is emerging as the most credible, democratic, and scalable alternative.”
He urged Indian companies to “step up with quality, compliance, and competitiveness”.
Rahul Mehta, chief mentor at the Clothing Manufacturers Association of India, warned that the tariff hike could make Indian apparel products “7% to 10% more expensive” than those of some global competitors, hurting exports to the US.
“Fortunately, this setback has come at the time when we have just signed an FTA with the UK and are proceeding rapidly with an FTA with the EU,” Mehta noted. “So yes, it is tough times, but not beyond our ability to face.”
The Indian government is yet to issue an official response to the tariff hike, though trade officials say negotiations with Washington are ongoing.
IT Sector Impact
Though the Indian IT services sector is not directly hit by the newly-announced 25 per cent US tariffs on goods, the ripple effects could be “substantial” as rising input costs may prompt US companies to scale back discretionary tech spends, Nitin Bhatt, Technology Sector Leader at EY India said on Thursday.
The tariff announcement comes at a time when the export-led Indian IT industry is grappling with macroeconomic uncertainties and the advent of Artificial Intelligence (AI).
“While the Indian IT services sector isn’t directly hit by the newly announced 25 per cent US tariffs, the ripple effects could be substantial. Rising input costs may prompt US companies to scale back discretionary tech spending. Simultaneously, growing unease around workforce mobility and evolving digital taxation frameworks could redefine how cross-border services are priced and delivered,” Bhatt said.
Companies that pivot to hybrid delivery models, diversify geographically, and embed AI at scale will be better positioned, not just to weather demand volatility, but to lead in an increasingly fragmented and uncertain global landscape, Bhatt pointed out.
(With Inputs from PTI)
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A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
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