India’s 90-Day Tariff Reprieve: Strategic Opportunities and Government Plans

The US decision to pause reciprocal tariffs on India and 74 other countries for 90 days offers New Delhi critical breathing room to recalibrate its trade strategy. While the immediate threat of steep tariffs (initially set at 26% for India) has subsided, the baseline 10% duty remains, and uncertainty looms over long-term outcomes.

India is accelerating talks with the US to finalise a bilateral trade deal (BTA) as its primary shield against future tariffs. Commerce Minister Piyush Goyal has reassured exporters that the government is working toward the “right mix and right balance” in negotiations, emphasising collaboration to remove the remaining 10% levy. The BTA aims to secure preferential access for Indian exports, particularly in sectors like textiles and electronics, while addressing US concerns over market access and non-tariff barriers.

Sector-Specific Mitigation Strategies

• Electronics Manufacturing: Industry bodies like ICEA (India Cellular and Electronics Association) are urging swift action to attract firms relocating from China, which now faces 125% US tariffs. The government plans to fast-track incentives under production-linked incentive (PLI) schemes to position India as a global hub for electronics manufacturing.
• Textiles and Apparel: Despite a combined tariff of 37% (if higher duties return), India’s competitiveness in this sector is expected to cushion the blow. The government is advising exporters to avoid third-country routing and focus on quality upgrades.
• Pharmaceuticals: While currently exempt from new tariffs, the sector remains on alert after Trump hinted at future levies. India is diversifying export markets and ramping up API (active pharmaceutical ingredient) production to reduce dependency on Chinese imports.

Anti-Dumping Safeguards and Export Vigilance

With China facing steep US tariffs, India is bracing for the potential dumping of Chinese goods into its market. The government has instructed exporters to avoid becoming conduits for third countries seeking to bypass US tariffs, reinforced by a recent ban on trans-shipment of export cargo from Bangladesh, Nepal, and Bhutan via Indian ports. Enhanced monitoring mechanisms and stricter quality controls are being implemented to prevent misuse of trade channels.

Global Supply Chain Realignment

The tariff pause positions India as a viable alternative to China for global manufacturers. Industry leaders emphasise the need to address structural challenges like infrastructure gaps and bureaucratic delays to capitalise on this opportunity. Vietnam, another beneficiary of the pause, has already initiated trade talks with the US, underscoring the urgency for India to act decisively.

The Road Ahead

The 90-day window is a double-edged sword– a chance to secure lasting trade concessions but also a race against time. Failure to clinch a deal could see tariffs rebound, disproportionately impacting sectors like gems, jewellery, and engineering goods. As Piyush Goyal noted, India’s restraint in not retaliating against US tariffs has paid off—but sustained diplomatic agility and industry-government coordination will determine whether this breather translates into long-term gains.