Indian officials optimistic of US tariff breakthrough

THE OPTIMISM IS BOLSTERED BY GOVERNMENT ASSESSMENTS. SUGGESTING THE ECONOMIC IMPACT WILL BE MORE MANAGEABLE THAN SOME EXTERNAL PROJECTIONS

- Sunetra Choudhury

There is “guarded optimism” that the US will eventually bring down the 50% tariff on exports from India, a senior official in New Delhi has said, citing the visit by an American trade negotiating team led by Brendan Lynch that concluded on Wednesday night and sustained diplomatic signals from President Donald Trump, including his birthday call to Prime Minister Narendra Modi.

“It’s not just the birthday call that made Prime Minister Narendra Modi refer to taking the relationship to ‘new heights’ in a post on X. It’s also other signs like the reiteration the very next day in UK,” the official said, adding that a strategy developed several weeks ago — which includes avoiding “noisy” confrontation while remaining steadfast on “red lines” — appears to be yielding results.

‘Trump said he was “very close to India, very close to Modi” during an event in the UK on Thursday.

The optimism is bolstered by government assessments suggesting the economic impact will be more manageable than some external projections, particularly those from trade groups.

“For the financial year 2025-26, the loss to GDP growth won't be more than 0.5 percentage point because it’s only come in now after half the year is over. The 0.8 percentage point loss comes in if it's more permanent, when countries who could have looked at setting up factories here, overlook us and go elsewhere. That's a more dynamic loss on growth,” this person added.