India’s trade relationship with the United States appears to be stabilising after months of uncertainty triggered by Washington’s unilateral steep tariffs. Despite the imposition of duties of up to 50 per cent on Indian imports, the impact on New Delhi’s export performance has been softer than initially expected. The resilience has given India critical negotiating space as both nations attempt to finalise a broader trade agreement that could recalibrate economic and strategic cooperation.
US-bound shipments from India fell 8.6 per cent year-on-year to $6.3 billion in October, a significant improvement from the 12 per cent decline in September, the first month after the punitive tariffs came into force. The softer contraction has eased pressure on New Delhi, particularly as other Asian economies such as Japan and South Korea have already entered agreements with Washington to reduce duties.
Indian officials involved in negotiations have maintained that the country is not in a rush to seal any deal unless it is fair and balanced. One senior government official, speaking to an international media house, noted that India has so far managed to avoid the worst impact of the tariff shock and that the broader effect on the economy remains under control. According to this official, although sectors such as textiles have experienced fewer orders, India has enough room to push for favourable terms. The official emphasised that New Delhi is prepared to wait, if required, to ensure the arrangement serves India’s long-term interests. People familiar with the discussions expect the United States to eventually roll back the 25 per cent duty linked to India’s purchases of Russian oil and reduce the broader tariff band to around 15 per cent. In return, India is ready to lower import duties on more than 80 per cent of tariff lines, while retaining protections for sensitive sectors, particularly agriculture.
Indications from Washington also suggest a thaw. President Donald Trump said recently that the two sides are nearing an agreement that could significantly broaden economic and security cooperation. Indian Commerce Minister Piyush Goyal, speaking earlier in the week, indicated that positive developments may be announced soon, provided the final terms are mutually acceptable.
India supports exporters amid headwinds
To shield exporters from the tariff impact and sharpen their global competitiveness, India has employed a mix of strategic trade agreements, tax cuts, and targeted sectoral support. Recent trade pacts with the UK, UAE, and Australia, combined with reductions in duties on critical raw materials, have provided exporters with much-needed flexibility. In addition, a $5.1 billion support package has helped struggling firms manage liquidity challenges. Export associations report that many Indian companies have managed to offset the fall in US demand by expanding aggressively into African and European markets. At the same time, exporters have maintained relationships with American buyers through discounts, flexible delivery schedules, and cost absorption.
Apparel and footwear manufacturers are reportedly absorbing up to 20 per cent additional costs to retain clients in the US market, according to the Federation of Indian Export Organisations. Authorities have also rolled out temporary loan moratoriums and other targeted relief measures, avoiding large-scale fiscal stimulus while ensuring that capable exporters remain competitive. Domestic tax cuts announced since September, covering hundreds of consumer goods, have strengthened local demand while supporting export competitiveness. Reductions in duties on key inputs such as man-made fibres have also bolstered textile shipments. Industry leaders in Tirupur, one of India’s largest garment clusters, say exporters are offering discounts between 10 per cent and 20 per cent, depending on product specifications and order size. The broader economic backdrop remains strong. India’s economy grew 7 per cent in the July–September quarter and is projected by the central bank to expand 6.8 per cent in the current financial year, reinforcing the country’s position as one of the world’s fastest-growing large economies.
US approves $92.8m defence sales to India
Amid the trade recalibration, India–US defence ties received a significant boost with Washington approving two major arms sales worth $92.8 million. The US State Department’s Defence Security Cooperation Agency (DSCA) said the approvals reflect Washington’s intention to enhance strategic cooperation with India in the Indo-Pacific and South Asia regions, where New Delhi is increasingly recognised as a stabilising force. The approvals come nine months after Prime Minister Narendra Modi’s visit to Washington, where both sides committed to deepening defence cooperation. This engagement resulted in the signing of a 10-year framework agreement in October aimed at expanding bilateral security collaboration.
Javelin missile system & excalibur artillery projectiles
The first package, valued at $45.7 million, covers the Javelin Missile System and includes 100 FGM-148 Javelin rounds, a “fly-to-buy” missile, and 25 lightweight command launch units. The package also includes simulation rounds, training systems, spare parts, technical assistance, and full logistical support. The DSCA indicated that these systems would significantly enhance India’s ability to counter present and emerging threats. It added that the Indian military would be able to integrate the equipment quickly and without operational difficulty. In a parallel approval, Washington cleared a $47.1 million sale of up to 216 M982A1 Excalibur precision artillery projectiles. The package includes fire-control systems, primers, propellant charges, technical documentation, and repair services. These high-precision munitions are expected to strengthen India’s long-range artillery capabilities, providing a decisive edge in complex combat environments. US officials said the proposed sales support Washington’s broader foreign policy objectives by reinforcing its strategic partnership with India, which the US views as a critical contributor to regional peace, political stability, and economic progress.
The simultaneous progress in trade talks and defence cooperation underscores the expanding strategic convergence between New Delhi and Washington. While the tariff issue remains unresolved, India’s resilient export performance, disciplined economic management, and measured negotiation strategy have strengthened its position. The defence approvals, meanwhile, reflect growing recognition in Washington of India’s essential role in shaping a stable Indo-Pacific order. With both countries signalling readiness to close gaps and advance cooperation, the coming months could mark a turning point in India–US relations, economically, strategically, and geopolitically.
