Faced with an abrupt tariff hike from Washington, New Delhi has chosen caution over confrontation. India is exploring increased imports of US goods, from natural gas to gold, in a bid to placate President Donald Trump, who stunned South Block this week with his announcement of a 25 per cent duty on Indian goods, effective August 01.
Government sources familiar with the discussions said New Delhi has ruled out an immediate retaliatory response, preferring instead to keep the fragile trade negotiations on track. Officials, who spoke on condition of anonymity, said, “India is considering ramping up its natural gas purchases from the US, and increase imports of communication equipment and gold.”
The move, they added, could help narrow the trade surplus with the US over the next few years. However, there are no plans to make additional defence acquisitions, including the F-35 fighter jets offered during Prime Minister Narendra Modi’s visit to Washington in February.
Commerce Minister Piyush Goyal, speaking in Parliament on Thursday, confirmed that his ministry is examining the implications of the tariff hike. “The implications of the recent developments are being examined,” he said, adding that consultations were under way with exporters and industry bodies. “All necessary steps will be taken to secure and advance our national interest.”
Trump, who has repeatedly accused India of imposing “strenuous and obnoxious” trade barriers, warned that further penalties could be imposed for India's energy and defence ties with Russia. He later posted on his social media platform, “I don’t care what India does with Russia,” calling both nations “dead economies.”
The timing of Trump's tariff salvo came as the two countries were believed to be nearing the final leg of a long-pending trade agreement. Modi had extended a state invitation to Trump earlier this year, and both sides had agreed to conclude a bilateral trade deal by the autumn.
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However, reports suggested that Indian officials were "shocked and disappointed" by the move. With the US elections approaching, some analysts believe Trump is leveraging tariffs for political messaging. “Trump being Trump, we can’t be sure,” remarked Abhijit Das, a New Delhi-based trade expert. “This could be a negotiating ploy as he did something similar with the EU.”
India’s rupee fell by 0.4 per cent against the dollar on Thursday, while the Nifty 50 index dropped 0.9 per cent before recovering slightly. Officials have told Washington that India is not prepared to import the expensive F-35s, nor will it commit to any major defence purchases at this time. Instead, New Delhi favours co-designing and manufacturing defence platforms domestically.
US Treasury Secretary Scott Bessent blamed India for stalling the trade dialogue. “The whole trade team has been frustrated,” he told CNBC. “The next steps are now up to India.”
Meanwhile, former Indian commerce ministry official Ajay Dua advised a measured response. “India is not in a position to promise huge import of energy from the US. Also, we are not in a position to talk about huge Indian investment taking place in the US,” he told Bloomberg TV. “India now needs to be a little more accommodating in the ongoing negotiations.”
Relations between the two capitals have grown tense in recent weeks, particularly after Trump claimed credit for brokering the ceasefire between India and Pakistan following a brief military exchange in May, a claim New Delhi flatly denied.
Despite the setbacks, New Delhi has maintained that it remains committed to a “mutually beneficial” trade partnership with the US, but with growing domestic pressure, the political room for compromise may soon shrink.
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