US Assures India Lower Tariffs Than Asian Competitors Under Proposed Bilateral Trade Agreement — November 13, 2026

In a significant breakthrough for New Delhi’s trade diplomacy, the United States has assured India that its exporters will receive a comparative tariff advantage over competing economies under the bilateral trade agreement currently being negotiated. The assurance addresses a pivotal condition that the Indian government had set before operationalising the pact.

Negotiations surrounding the first tranche of the bilateral trade deal, which centres on merchandise trade, have reached the final legal-drafting stages following discussions with an American negotiating team that visited New Delhi in early November.

Securing the Comparative Tariff Advantage

Commerce and Industry Minister Piyush Goyal had repeatedly emphasised that India would operationalise the bilateral agreement only once domestic exporters were assured of comparable or preferential duty rates against regional manufacturing competitors.

Indian manufacturers in labour-intensive sectors have long contended with aggressive pricing from countries such as Vietnam, Bangladesh, and Indonesia in the American market. The assurance from Washington provides Indian exporters with a tariff buffer, ensuring that duties levied on Indian goods entering the US will be structurally lower than those slapped on regional peers.

While specific product-level tariffs have not yet been made public, the framework builds upon earlier agreements reached between Prime Minister Narendra Modi and US President Donald Trump. In February 2026, Washington agreed to lower its reciprocal tariff rate on Indian goods from 25% to 18%. The broader framework also outlined reciprocal tariff exemptions for items such as generic pharmaceuticals, gems and diamonds, and aircraft parts, subject to the finalisation of terms.

Section 301 Investigations and Tariff Architecture

The exact tariff structure will be closely aligned with the conclusions of investigations conducted by the Office of the United States Trade Representative (USTR) under Section 301 of the Trade Act of 1974.

Earlier this year, the USTR placed Indian exports into a lower 10% additional tariff tier under Section 301 measures regarding goods produced with forced labour, whereas rival exporting nations were subjected to higher duties of 12.5%. New Delhi is now expecting favourable treatment in the subsequent Section 301 investigation into industrial and manufacturing overcapacity, where India is among 14 international partners—including the European Union, Japan, and Australia—collaborating with the US to address global supply distortions.

What This Means for Dalal Street

The assurance delivers long-awaited clarity to several key segments of the Indian equity market, notably export-oriented manufacturing firms whose operating margins remain highly sensitive to American customs tariffs.

Key Export Sectors in Focus:

• Textiles and Apparel: Ready-made garment manufacturers are positioned to claw back US market share from Bangladesh and Vietnam if duty differentials tilt in India's favour.
• Leather and Footwear: Export houses will benefit from reduced landed costs at American ports, providing support to domestic leather clusters.
• Gems, Jewellery, and Pharmaceuticals: Clarity on tariff rollbacks under the aligned partners framework offers relief to large-cap drugmakers and polished diamond exporters.
• Engineering Goods and Chemicals: Producers of organic chemicals, plastics, and selected machinery stand to gain expanded market entry under reduced baseline reciprocal tariffs.

Next Steps Towards Implementation

Despite the political and commercial consensus, the agreement is pending formal signing and implementation. The remaining stages involve completing the legal scrubbing of the text, formalising rules of origin to prevent third-party transhipment, and obtaining statutory sign-offs from both capitals.

Indian negotiators have reiterated that sensitive domestic areas—such as dairy and genetically modified farm goods—remain protected from tariff concessions, while wider negotiations encompassing services and digital trade rules are scheduled to follow in subsequent tranches of the bilateral trade framework.