Overall, India’s trade landscape is changing in fundamental ways. Just last year, the country was making multimillion-dollar purchases of $52.7 billion crude oil from Russia. This amount constituted 37% of India’s total oil expenditure, highlighting the country’s heavy reliance on Russian energy supplies. India seems to be betting big on Russian crude. It has never publicly acknowledged any cut back on its purchases, even amid escalating geopolitical tensions and U.S. tariffs.
India had the most impressive 14.5% increase in goods exports to the US from September to October. This encouraging trend is the first increase in export growth in five months. This increase comes even as total exports from India have fallen by 11.8% year-on-year in October. It foreshadows a potentially complex and contentious trade environment brewing beneath the surface. Even with the US market stagnating, exports to the US are increasing. This expansion occurs despite bilateral trade falling with 15 of India’s top 20 markets.
In retaliation, the US retaliated by raising tariffs on Indian goods. This includes a large 25% penalty on purchases of Russian oil, which went into effect on August 27. This change has led the Trump administration to press India to increase its imports of US oil products. Concurrently, trade talks between India and the US have resumed after stalling over India’s steadfastness in maintaining Russian oil imports.
Indian state-owned oil marketing companies have agreed to triple imports of liquified petroleum gas (LPG) from the United States. This accord is the most important achievement from those negotiations thus far. According to reports, India will now import 10% of its annual LPG requirements from the US. Considered a historic agreement, the major deal is intended to deepen bilateral trade ties between the two countries.
The US recently repealed reciprocal tariffs on several agricultural products. This regionally progressive step will greatly advantage India and firmly improve Indian trade on the whole occasion. This rollback will free up approximately $1 billion of Indian agricultural exports to the US from tariffs. Consequently, Indian exporters will benefit from significantly improved competitive conditions in the market.
Mr. Ajay Srivastava of the Global Trade Research Initiative says that there is reason to be circumspect.
“Tariff-exempt sectors such as smartphones and pharmaceuticals may have performed better – though this remains a tentative assumption,” – Ajay Srivastava of Global Trade Research Initiative (GTRI)
However, he also pointed out the challenges that persist.
“Despite the October rebound, India’s shipments to the US have dropped nearly 28.4% between May and October, erasing more than $2.5 billion in monthly export value,” – Mr. Srivastava