Kolkata: Under the India-Us trade agreement, tariffs on Indian products in the US market will be reduced from 50%, which was the highest in the world to 18%. As a result, India is expected to benefit significantly compared to neighbouring countries such as China, Bangladesh and Pakistan. This is going to benefit a number of sectors, especially labour-intensive sectors such as textiles, gems and jewellery, leather and footwear, marine products etc.
The new tariff
The point to note is that while the composite tariff was 50%, as much as 25% was due to Trump’s opposition to India buying a lot of Russian crude, which he thought was used to fund the the aggression against Ukraine. That part will be eliminated. The reciprocal tariff of 25% will be reduced to 18%. The rate is lower than the neighbouring countries of India. This will help Indian exporters access the US market at a lower price. Let’s have a look at the rate of tariff Washington will now have in effect against some of the major economies.
Rate of US tariffs on key Asian countries
China: 37%
Bangladesh: 20%
Sri Lanka: 20%
Taiwan: 20%
Vietnam: 20%
Indonesia: 19%
Malaysia: 19%
Pakistan: 19%
Philippines: 19%
Thailand: 19%
US tariffs against some developed economies
United Kingdom: 10%
Japan: 15%
Italy: 15%
France: 15%
Germany: 15%
Turkey: 15%
Austria:15%
Belgium: 15%
India-US trade agreement
Earlier, the tariffs against India were raised to 50%. They came into effect from Sept 2025. But following the trade agreement between the two countries which were on the negotiating table since February 2025. This provides India with cheaper access to the US market. As is evident from the table above, India will have some advantage over several of its neighbours in Asia as far as tariffs are concerned. But some developed economies have lower tariffs in the 10% to 15% range. India has also secured some significant advantages in the free trade agreement with the EU. The India-US trade agreement can be a positive both for the stock markets and for the Indian rupee which was declining against the US dollar for the past several months.