India’s exports to the United States are expected to gain momentum following Washington’s decision to reduce tariffs on Indian goods to 18%, Finance Minister Nirmala Sitharaman said on Tuesday, describing the move as a “good auguring” for exporters.
Speaking in an interview to media, Sitharaman said the tariff reduction would help Indian exporters regain competitiveness in the US market, particularly after the sharp impact of punitive duties imposed last year.
“So, actually our exports will pick up now, that is my expectation,” she said, adding that exporters had also identified alternative markets during the period of elevated tariffs and would continue operating in them.
Tariff rollback brings relief after export setback
The US had imposed steep tariffs of up to 50% on Indian goods last year, which significantly raised landed costs and squeezed exporter margins. Several sectors, including steel, aluminium, textiles, engineering goods and certain agricultural products, were affected as US buyers diverted orders to other suppliers.
On Monday, US President Donald Trump announced a reduction in tariffs on Indian goods to 18% as part of a broader trade understanding. The agreement includes India lowering trade barriers and committing to stop purchases of Russian oil, instead sourcing energy from the US and potentially Venezuela.
On implementation, the revised tariff structure would bring duties on Indian exports broadly in line with other Asian economies, where rates range between 15% and 19%.
Improved competitiveness against regional rivals
The 18% tariff undercuts duties imposed on key regional competitors such as Vietnam and Bangladesh, which face tariffs of around 20%. This is expected to restore India’s price advantage in the US market.
Labour-intensive sectors such as apparel, footwear and jewellery are likely to see the most immediate benefit. These segments had witnessed a sharp fall in orders after the 50% tariffs imposed in August severely dented competitiveness.
Earlier in the day, Sitharaman described the development as “good news for #MadeInIndia products” in a social media post, noting that Indian goods would now face reduced duties in the US market.
Trade and capital flow impact
Earlier punitive tariffs had also weighed on bilateral trade. India’s trade surplus with the US shrank by an average of USD 2.5 billion per month between September and December 2025 compared to the January–August period, according to research cited in the report.
Investor sentiment had weakened as well, with foreign investors pulling out nearly USD 14 billion in equities since July 2025.
The rollback of the additional 25% punitive tariff linked to Russian oil purchases effectively lowers the applied tariff on Indian exports from 50% to 18%, offering significant relief to exporters and improving prospects for a recovery in trade flows.