India vows to keep negotiating with Washington after a new 10 percent American tariff, wagering that its fresh trade pacts with the United Kingdom and the European Union give it the leverage to wait for balanced terms.
NEW DELHI, July 26, 2026: India will keep negotiating with the United States toward a bilateral trade agreement despite a new 10 percent tariff that hit the majority of Indian goods on Friday, the country’s commerce ministry said this weekend, casting the latest escalation from Washington as a setback to be managed rather than a rupture to be answered. The statement, issued Saturday and reported by Reuters, capped a week in which the world’s most populous nation absorbed another American tariff shock even as it banked the first commercial gains from its new agreement with the United Kingdom, steered a concluded pact with the European Union toward ratification, and pressed ahead with a trade-defense case against steel from China, Japan and Russia. Taken together, the four tracks amount to the clearest test yet of New Delhi’s bet that a diversified web of trade relationships can blunt the cost of a hard bargain with its single largest export market.
“The government remains committed to working with the United States towards the early conclusion of the India-U.S. Bilateral Trade Agreement,” the Ministry of Commerce and Industry said in the statement carried by Reuters, adding that India would continue discussions on sector-specific issues, including textiles, as part of the broader negotiation. The two governments have been working on a trade agreement since last year, seeking to deepen economic ties and resolve long-running disputes over market access.
The trigger for Saturday’s statement came a day earlier. On Friday, July 24, the Trump administration put into effect fresh duties of between 10 and 12.5 percent on goods from 60 trading partners, India among them, following the conclusion of Section 301 investigations by the Office of the United States Trade Representative into how those economies police imports produced with forced labour. According to trade data provider IndexBox, 17 countries, including India, were placed in the lower 10 percent band, while 43 economies drew the higher 12.5 percent rate. The new levies replaced a temporary 10 percent duty that President Donald Trump had imposed in February 2026 and that expired the same day the permanent regime took hold. Crucially for exporters, the new duty applies on top of standard US most-favoured-nation tariffs, not in place of them.
A Lower Rate, and a Longer List of Exemptions
For New Delhi, the sting of the headline number was tempered by two facts. First, the 10 percent rate is lower than the 12.5 percent Washington had proposed for India in June, a reduction the commerce ministry attributed in part to sustained engagement between the two capitals. Second, the exemption list is long. The ministry said the measure excludes products such as generic pharmaceuticals, smartphones, steel, aluminium and auto parts, and estimated that roughly 45 percent of India’s exports to the United States would remain entirely outside the scope of the new tariff. The remaining 55 percent of the export basket now faces the additional 10 percent duty. IndexBox reported that the regime also carves out cast iron from India and Brazil, a niche but notable concession for Indian foundries that ship pipe fittings, manhole covers and machine castings to American buyers.
Indian officials have linked the softer treatment to steps taken at home. In recent weeks the Directorate General of Foreign Trade notified a formal procedure for examining imports suspected of having been produced with forced labour, a move trade publications have described as central to India securing the lower band under Washington’s new framework. The gesture was as much strategic as regulatory: by aligning its own import screening with the stated rationale of the American action, New Delhi removed the central justification for a harsher rate while conceding nothing in its bilateral negotiating position.
That negotiating position has hardened in public over the past month. Speaking at the India Global Forum’s UK-India Week event in London on June 25, Commerce and Industry Minister Piyush Goyal said the India-US agreement had essentially been finalised but would not enter into force until India secured a clear tariff advantage over competing manufacturing economies such as Vietnam, Thailand, China, Bangladesh and Sri Lanka. “A FTA is basically about getting a comparative advantage over your competitors for market access,” Goyal said, according to Outlook Business. “Until that framework of getting that competitive advantage can be finalised, we can’t put a US deal into force.” He added that the United States would need to find the appropriate tools and legal backing to deliver that advantage, and that the deal would be on the day that happened.
Goyal has repeatedly rejected the suggestion that India should sign quickly to escape tariff pressure. “We do not work under pressure. Securing national interest is our sole priority and driving factor,” he said earlier this year, in remarks reported by Deccan Herald. Domestic critics have pushed the government to hold that line. Ashwani Mahajan, co-convenor of the Swadeshi Jagran Manch, the economic wing of the ruling party’s ideological affiliate, told Business Standard in late June that the American proposal on the table looked “more like one-sided market access” than a balanced trade agreement. The commerce ministry’s Saturday statement, promising continued engagement without any hint of unilateral concession, suggests the government intends to keep negotiating on exactly those terms: patiently, and from behind a widening hedge.
The London Track: CETA’s First Tranche Arrives
The most tangible piece of that hedge took effect eleven days before the American tariffs did. On July 15, India gave legal effect to the first tranche of tariff concessions under the India-UK Comprehensive Economic and Trade Agreement, the trade pact signed with London after years of negotiation. The Ministry of Finance’s Department of Revenue issued Notification No. 29/2026-Customs on July 14 to operationalise the concessions, according to an analysis by tax advisory firm A2Z Taxcorp, structuring them across three schedules covering preferential basic customs duty rates, reduced agriculture infrastructure cess and health cess where applicable, separate concessional treatment for products including alcoholic beverages, and a tariff-rate quota mechanism for motor vehicles.
The architecture matters for traders on both sides. Under the CETA, Indian exporters receive duty-free access to the United Kingdom on about 99 percent of tariff lines, covering nearly the entire export basket, according to Outlook Business. In return, India is phasing down its own duties on British goods, with the most politically sensitive concession, passenger cars, managed through the quota system: defined annual volumes of UK-built vehicles enter at reduced in-quota duty rates, while shipments beyond the quota face higher out-of-quota tariffs. Outlook Business has reported that India will allow reduced-duty imports of about 378,000 UK cars over the first 15 years of the pact. The quotas are administered electronically by the Directorate General of Foreign Trade, with authorisations transmitted to the Indian Customs EDI System and imports permitted only against electronic debits, a design intended to prevent the quota leakage that has plagued older preference schemes.
The enabling plumbing was laid earlier in the month. The Central Board of Indirect Taxes and Customs notified the Customs Tariff (Determination of Origin of Goods) Rules for the agreement on July 3, setting out when goods qualify as originating in India or the UK, how qualifying value content is calculated, and what certificates of origin exporters must present to claim preferences. The rules also require that goods transiting third countries remain under customs supervision, a safeguard against trans-shipment abuse that will be familiar to compliance teams working under other modern FTAs.
The commercial stakes are meaningful and growing. Bilateral India-UK trade rose 8.62 percent to 25.12 billion dollars in the 2025-26 fiscal year, from 23.13 billion dollars a year earlier, with Indian exports of 13.44 billion dollars producing a surplus of 1.76 billion dollars, according to Outlook Business. The sectors expected to gain most from duty-free access read like a roster of India’s labour-intensive export base: textiles, leather, footwear, marine products, sports goods, toys, gems and jewellery, engineering goods, auto components and organic chemicals. Several of those are precisely the categories now facing the new 10 percent surcharge in the American market, which is why the timing of the CETA’s entry into force has taken on outsized political significance in New Delhi. Every percentage point of preference in London strengthens the argument that India can afford to wait for a better deal from Washington.
Brussels, Ratification and the Numbers Behind the EU Deal
The second leg of the hedge is larger still, though not yet in force. On January 27, 2026, India and the European Union concluded their free trade agreement in New Delhi, ending a negotiation that had run, with interruptions, for nearly two decades. European Commission President Ursula von der Leyen called it a historic achievement. “The EU and India make history today, deepening the partnership between the world’s biggest democracies,” she said at the announcement. “We have created a free trade zone of 2 billion people, with both sides set to gain economically. We have sent a signal to the world that rules-based cooperation still delivers great outcomes.”
The scale is considerable. The EU and India exchange more than 180 billion euros in goods and services annually, trade that the Commission says sustains nearly 800,000 European jobs. Under the agreement, total trade liberalisation coverage reaches 96.6 percent of tariff lines for India and 99.3 percent for the EU, according to the European Commission’s Intellectual Property Helpdesk. For European exporters, the deal dismantles some of the highest industrial tariffs India maintains: Commission materials indicate that Indian duties running as high as 44 percent on some machinery, 22 percent on chemicals and 11 percent on pharmaceuticals are mostly slated for elimination, either at entry into force or over transition periods of up to ten years. Roughly half of machinery tariffs disappear immediately, with the remainder phased out; chemicals duties of up to 22 percent are largely removed at entry into force. India, for its part, gains improved access for fisheries, chemicals, textiles, footwear and pharmaceuticals, while the EU shielded sensitive agricultural lines such as sugar, rice, beef, poultry and milk powders from any concession.
The agreement is now moving through the ratification pipeline: legal review and translation, approval by the Council of the European Union, and a consent vote in the European Parliament, with corresponding cabinet-level approval in India. Trade lawyers expect provisional application of the trade pillar could arrive before full ratification by member states, as it did with earlier EU agreements, but no date has been fixed. For Indian exporters staring at the new American surcharge, the EU deal is therefore a promise rather than a preference, though a promise with a signature on it. For New Delhi’s negotiators, it is something else: proof, twice over in six months, that India can close major reciprocal agreements when the other side offers balance.
Steel, Safeguards and the Defensive Track
If the UK and EU tracks show India’s open hand, the fourth track shows the closed one. On June 25, the Directorate General of Trade Remedies opened an anti-dumping investigation into hot-rolled flat steel products originating in or exported from China, Japan and Russia, according to the agency’s initiation notification reported by Argus Media. The application was filed by JSW Steel together with JSW Vijayanagar Metallics and Jindal Steel Odisha, which submitted what the DGTR found to be satisfactory prima facie evidence that imports from the three origins had surged and were undercutting domestic prices. The products under investigation fall under HS headings 7208, 7211, 7225 and 7226, covering alloy and non-alloy steel up to 25 millimetres thick and 2,100 millimetres wide, with calendar 2025 proposed as the dumping investigation period.
The case lands on top of an already fortified perimeter. India imposed provisional safeguard duties on flat steel in April 2025 and extended them for three years in December, and it has previously applied anti-dumping duties on Vietnamese hot-rolled coil and Chinese cold-rolled non-oriented electrical steel. Imports under the four HS headings fell 23 percent to 4.7 million tonnes in 2025, Argus reported citing Global Trade Tracker data, but rebounded 4 percent year on year to 1.5 million tonnes in the first four months of 2026 as rising domestic prices opened arbitrage windows and Chinese and Japanese mills doubled shipments. Domestic hot-rolled coil was assessed at 57,600 rupees a tonne ex-Mumbai in mid-June, per Argus, down from about 59,000 rupees in early April.
The steel case is worth reading alongside the diplomacy, not apart from it. India’s message across all four tracks is consistent: liberalisation is on offer, but selectively, reciprocally and on Indian terms, with trade-remedy instruments deployed without apology where import surges threaten strategic industries. It is, in miniature, the same posture New Delhi has taken with Washington, where it has declined to trade away agricultural and dairy protections or accept what its critics call one-sided market opening in exchange for tariff relief.
Counting the Cost, and the Competitive Angle
Exporter reaction to Friday’s tariff has been notably measured. The Federation of Indian Export Organisations acknowledged that the additional 10 percent duty will raise the landed cost of Indian products in the American market, but urged members to assess the measure through a competitive lens rather than the headline rate. FIEO President S.C. Ralhan noted that India was not singled out: several rivals, including China, Vietnam, Thailand, Turkey, the United Arab Emirates, Brazil and South Africa, drew the higher 12.5 percent rate, while direct competitors in labour-intensive sectors such as Bangladesh, Cambodia, Pakistan, Sri Lanka, Indonesia and Malaysia face the same 10 percent. That configuration, he argued, leaves India in a relatively competitive position and even opens opportunities in categories where 12.5 percent countries lose ground. FIEO has advised exporters to run product-by-product assessments of applicable US tariffs, available exclusions and the treatment of competing suppliers before repricing or walking away from orders.
Not every sector shares the equanimity. Reuters reported on Friday that Indian textile and apparel exporters are likely to be disadvantaged against several Asian rivals under the new regime, which helps explain why the commerce ministry singled out textiles as a live topic in the bilateral talks. The gems and jewellery trade, which counts the United States as its largest market, is also watching closely; the Gem and Jewellery Export Promotion Council’s trade publication noted that the sector remains inside the 10 percent net. Pharmaceutical exporters, by contrast, dodged the measure almost entirely, since generic medicines, the backbone of India’s roughly one-third share of the American generics supply, sit on the exemption list, as do smartphones assembled in India’s fast-growing electronics corridor.
The macroeconomic arithmetic is uncomfortable but not catastrophic. With 55 percent of US-bound shipments now carrying an extra 10 points of duty on top of normal tariffs, exporters face a choice between absorbing margin, splitting the cost with American buyers, or losing volume. The February episode, when the temporary 10 percent duty first appeared, already produced payment delays and order deferrals that prompted FIEO to seek interest subvention support for exporters. Adding to the headwinds, the International Monetary Fund this month trimmed its India growth forecast for the current fiscal year to 6.4 percent amid higher energy prices. Yet the government’s own 45 percent exemption estimate, the parity or better positioning against rivals, and the new UK preferences together explain why neither the rupee nor Indian equity markets treated Friday’s action as a crisis.
There is also legal uncertainty on the American side. Small businesses have already filed court challenges against the administration’s latest global tariff actions, Business Standard reported, and earlier litigation over tariffs imposed under emergency economic powers has left US importers navigating refund questions. Importers and exporters alike have learned to treat any given US tariff rate as provisional, which paradoxically strengthens the case for the kind of durable, treaty-based preferences India has just secured in London and Brussels.
For global supply chain managers, the practical takeaways are threefold. American importers sourcing from India need tariff-line-level diligence, because the exemption list is product-specific and the difference between a 10 percent surcharge and none at all can turn on HTS classification. Buyers comparing Asian origins should note that the new regime narrows, and in some categories reverses, India’s tariff disadvantage against China and Vietnam. And companies using India as an export platform now have a genuine routing choice: the UK market is duty-free for almost all Indian goods as of July 15, subject to rules-of-origin paperwork, while the EU agreement promises similar breadth once ratified. Even steel flows are being reshuffled; the United Kingdom’s revised safeguard quotas, published in June, nearly tripled India’s hot-rolled coil allocation into the British market even as India moves to wall off its own coil market from Chinese, Japanese and Russian tonnage.
What happens next will be decided in negotiating rooms rather than customs houses. Sector discussions with Washington, textiles first among them, continue. Goyal has said India expects to conclude further agreements with Canada, Brazil and Mexico by the end of 2026, which would extend the hedge still further. The bilateral agreement with the United States remains, in the minister’s telling, finalised in substance and waiting only for an American legal framework that delivers India a genuine tariff edge over its competitors. Until that framework exists, New Delhi’s weekend message signalled that India will keep talking, keep exporting through the 10 percent headwind, and keep building alternatives. In a trade environment where leverage belongs to the party best able to wait, India has spent 2026 methodically acquiring the ability to do exactly that.