India Watchful Of Tariff Differential Versus Other Countries Amid US Trade Talks, Say Sources

As India continues its trade negotiations with the United States, government sources say they are closely monitoring potential tariff differentials that could emerge vis-à-vis other countries.

"We're in wait-and-watch mode," an official said, noting that the full extent of the impact will only be clear after the Aug. 1 deadline, when the US is expected to firm up its tariff plans.

So far, apart from China, tariffs imposed by the US remain just announcements. "They haven't come into effect yet, so our relative position hasn't shifted much," an official said, adding that Indian exports continue to grow, reflecting the positive impact of recent government support policies.

Officials say the possibility of differential tariffs may eventually have differential impact, but insist contingency planning will begin only once the exact measures are known. "Backups will be prepared once we understand the full effect," a source added.

The government is also keeping an eye on order frontloading, which may be affecting trade volumes ahead of potential duties. On the India-US trade deal, sources confirmed that the fifth round of negotiations is currently underway in Washington, and that the first tranche of the bilateral trade agreement is on track for October 2025. A mini deal might also be announced prior to that, around the Aug. 1 mark.

The Trump administration has also indicated that trade deals will be signed with other countries, and that is also something that Indian officials are closely monitorting. "The industry is seized of the matter and is engaging with stakeholders. There is no need to worry just yet," a source said.

On the India-EU free trade agreement, government sources said both sides have exchanged offers on services and non-services, and that the 12th round of negotiations has concluded. The next round is scheduled for the first week of September, with the EU side expected to visit India. Officials said the talks are progressing steadily and clarified that “every deal stands on its own”, indicating no overlap or dependency with other trade tracks.

Separately, India is also pushing forward with the review of its FTA with ASEAN. Sources said nine rounds of negotiations have been completed, with the tenth round scheduled in August in New Delhi and another physical round expected in Malaysia in October. While there is a sense that progress could have been faster, government officials noted that talks are moving forward on key issues including customs procedures, technical cooperation, and market access, and that they are “hoping for a quick conclusion.”