Associated Chambers of Commerce and Industry of India (ASSOCHAM) says sharp reduction in US duties marks a structural shift in India–US trade relations and strengthens India’s position in global supply chains.

India has secured a significant breakthrough in its trade relationship with the United States following a sharp reduction in US tariff rates on Indian exports to 18%, a move that is expected to materially improve export competitiveness and accelerate bilateral trade growth, according to industry body ASSOCHAM.

Welcoming the development, ASSOCHAM President Nirmal Kumar Minda said the tariff cut represents a decisive step forward for “Made in India” products and reflects India’s rising influence in shaping the global trade order. Bilateral trade between India and the US is now projected to reach $500 billion over the next five years, driven by improved market access and deeper economic cooperation.

India gains edge over key export competitors

The revised tariff regime places India in a more advantageous position compared with several competing export economies. At an 18% duty level, Indian goods now face lower tariffs than exports from countries such as Bangladesh, Vietnam, Sri Lanka, Taiwan, Pakistan, Indonesia, Malaysia and Thailand. Even larger exporters including Canada and South Africa reportedly face higher duties, strengthening India’s relative standing in the US market.

Industry estimates suggest that Indian exports had earlier been subject to cumulative tariffs of nearly 50%, factoring in reciprocal and punitive levies. The reduction to 18% is therefore being seen as a structural shift rather than an incremental change, with potential long-term benefits for Indian manufacturers and exporters.

Labour-intensive sectors to benefit most

Labour-intensive sectors such as textiles, garments, footwear and electronics are expected to be among the biggest beneficiaries of the tariff cut. ASSOCHAM noted that the improved cost competitiveness could help Indian firms attract global buyers, expand order volumes and integrate more deeply into international supply chains. The move is also expected to support fresh investments aligned with export-led manufacturing.

Background: India–US trade deal

The tariff reduction forms part of a broader India–US trade understanding announced late on Tuesday, aimed at easing market barriers and strengthening economic ties between the two countries. Over the past decade, India and the US have steadily expanded trade and strategic cooperation, with both sides seeking to diversify supply chains and reduce dependence on single markets.