The 90-day tariff pause between the US and China has sparked mixed reactions among Indian exporters, who are weighing the risks of increased competition against new opportunities for trade realignment.
Under the 90-day truce, the US has agreed to reduce tariffs on Chinese imports to 30% from 145%, while China will cut tariffs on US goods to 10% from 125%. Though seen as a step towards de-escalation and more stability for the global trade scenario, Indian exporters are watching closely.
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Pankaj Chadha, chairman of the Engineering Export Promotion Council, warns that India and China now operate at nearly equal tariff levels, but China's scale and efficiency could tilt the balance. “A 20% (India's 10% versus China's 30% in most sectors) delta will be easily beaten by the Chinese,” he said, pointing to the lack of sectoral tariff adjustments in key areas like steel and steel products, auto and auto components, and aluminium and aluminium products.
SC Ralhan, president of the Federation of Indian Export Organisations, called the development a “double-edged sword”, noting that while competition could intensify in third markets, India has a chance to consolidate gains in sectors less affected by the truce, including pharmaceuticals, jewellery, engineering goods, and ITeS.
Ralhan also stressed the need for India to aggressively pursue preferential trade deals with the US to maintain its edge.
Global Trade Research Initiative's (GTRI) Ajay Srivastava echoed Ralhan's thoughts, adding that even as this new deal eases pressure on global supply chains, there's a catch.
"As the tariff gap narrows, companies that had shifted production to places like Vietnam, India, or Mexico may return to China. The “China Plus One” strategy could quietly fade. Ironically, this deal could undo the very diversification the tariff war aimed to spark," he added.
"While low-investment assembly operations may linger in India for now, deeper manufacturing—the kind that builds real industrial ecosystems—may stall or even return to China. Investors are watching the U.S. tilt, and many will hesitate to commit unless India can lock in a competitive advantage," he said.
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