US-India Trade Tensions Rise as Tariffs Double and India Prepares Relief Package
The US-India relationship finds itself at a critical juncture, with the US doubling tariffs on Indian goods and India preparing a relief package for exporters in vulnerable sectors. Meanwhile, India's GST Council has approved a tax overhaul to bolster the domestic economy.
Chintan Vaishnav, former Director of the Atal Innovation Mission, addressed the US-India Chamber of Commerce Austin's 3rd Annual Summit, highlighting India's transformation from a labor and talent source to an innovation hub. Vaishnav's keynote speech came on the same day President Donald Trump announced the tariff hike, affecting over half of India's exports to the US, particularly in labor-intensive sectors like textiles, gems and jewellery, seafood, and leather goods.
India's Chief Economic Adviser has projected a 0.5-0.6% GDP impact for FY26 due to the tariffs. To mitigate the effects, the Finance Ministry is preparing a relief package for exporters in these vulnerable sectors. Additionally, the GST Council has approved an overhaul to a two-tier system of 5% and 18% effective September 22, 2025, to cushion the domestic economy.
With Texas being among India's top 20 trade partners and having a deepening commercial presence in the region, the US-India trade dynamics are set to significantly impact both nations. As the US-India relationship navigates this inflection point, both sides are taking steps to protect their economies and foster growth.
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