India weighs options ahead of Trump's tariff action today

India is adopting a wait-and-see approach to US President Donald Trump's impending "reciprocal tariffs" announcement on Wednesday, choosing to evaluate the actual impact before formulating its response a measured stance compared to the more reactive approaches of other major economies.

- Rajeev Jayaswal

The preparations come ahead of Trump's April 2 "Liberation Day" tariffs that are expected to be announced at 4pm local time on Wednesday (early Thursday in India). The Republican leader on Monday said India will be among the countries that drop tariffs in response to his move.

Indian officials say they have mapped out four possible scenarios and their potential implications for Indian trade. In a product-specific scenario, Chinese, Mexican, Canadian and EU exports would likely be most affected, potentially making Indian exports more competitive. Sector-specific measures would impact all global players including India by increasing costs and reducing margins. And both country-specific and secondary tariff scenarios would adversely affect India's economy, according to two people close to the development.

"In this atmosphere of uncertainty, where even Americans are guessing, we will wait for the announcements and evaluate their net impact on our trade and economy," said a person close to the developments, who asked not to be named.

This stance stems from India's focus on evaluating trade deals based on complementarity rather than just tariff levels. "In any bilateral trade deal, the net impact is evaluated on the basis of complementarity and not just on the basis of quantum of tariffs," a second person said, citing India's free trade agreement with the United Arab Emirates.

Under that FTA, India reduced import tariff for liquefied natural gas imports from UAE to zero because it (India) is energy deficient, "hence no domestic competition on the product," the second person added.