What Happened
- President Trump raised the new global tariff from 10% to 15% on February 21, 2026 — one day after the US Supreme Court struck down his IEEPA-based tariffs
- The 15% tariff is imposed under the Trade Act of 1974, which the Supreme Court ruling did not affect
- India's Commerce Ministry issued a statement indicating it was "reviewing the situation" and monitoring the evolving US trade policy landscape
- Indian exporters broadly welcomed the step down from the previous IEEPA-based reciprocal tariff of up to 26%, but remain uncertain about the trajectory of the India–US Bilateral Trade Agreement (BTA)
- Section 232 tariffs on steel (25%) and aluminium (10%) remain in force, continuing to affect India's metals exports
- India had been in active BTA negotiations with the US since February 2025, with an interim framework that had lowered tariffs to 18% for select Indian goods — this is now being reassessed in light of the 15% global baseline
Static Topic Bridges
India's Commerce Ministry and Trade Remedy Instruments
India's Ministry of Commerce and Industry is the nodal ministry for trade policy, export promotion, and international trade negotiations. It is assisted by several key bodies: the Directorate General of Foreign Trade (DGFT), the Directorate General of Trade Remedies (DGTR), and the Commerce Ministry's trade negotiation division.
- DGFT: Administers the Foreign Trade Policy (FTP); issues importer-exporter codes, export authorisations, advance authorisations, and EPCG licences
- DGTR: Conducts investigations into anti-dumping, countervailing duties, and safeguard measures; successor to the Directorate General of Anti-Dumping and Allied Duties (DGAD) and the Directorate General of Safeguards
- Countervailing Duties (CVD): Imposed on subsidised imports that injure domestic industry; authorised under India's Customs Tariff Act, 1975 (Section 9 read with CVD Rules 1995)
- India's current FTP: FTP 2023–28 (notified March 2023), replacing FTP 2015–20; focuses on USD 2 trillion exports by 2030, RoDTEP, export hubs, districts as export clusters
- Commerce Ministry can recommend retaliatory tariffs under India's domestic trade remedy laws as a reciprocal measure if negotiations fail
Connection to this news: The Commerce Ministry's "wait and watch" posture indicates India is deferring aggressive trade remedy action against US tariffs, preferring the negotiating track of the BTA, while its legal instruments remain ready if needed.
India's Interim BTA Framework — What Was Agreed and What Remains
In February 2025, India and the US agreed on a framework for an interim Bilateral Trade Agreement. The framework was the result of negotiations between Prime Minister Modi and President Trump and represented India's first significant bilateral tariff agreement with the US.
- Interim Agreement framework (February 2025): India agreed to reduce/eliminate tariffs on US industrial goods and a range of agricultural products (including DDGs, sorghum, tree nuts, fruit, soybean oil, wine, spirits)
- US commitments: Reduce reciprocal tariffs from 25% to 18% on Indian textiles, apparel, leather, footwear, plastics, rubber, organic chemicals; remove tariffs on Indian pharmaceuticals, gems, diamonds, and aircraft parts upon finalisation
- India committed to purchasing US$ 500 billion of US energy, IT products, aircraft, precious metals, and coal over five years
- Post-IEEPA ruling, the 15% global tariff replaces the 18% negotiated rate for some categories — India's exports may actually face a lower tariff than what was negotiated
- However, tariff concessions on pharmaceuticals and gems are now contingent on a formal deal that has not been finalised
Connection to this news: The 15% global tariff effectively creates a new floor for India–US tariff discussions. If the formal BTA is concluded, India could secure better terms for pharmaceuticals and gems — the sectors that matter most for India's export earnings.
India's Export Diversification Strategy and PLI Schemes
India's vulnerability to US tariff volatility reflects the high concentration of its exports in a few markets. Diversifying export destinations and building domestic manufacturing capacity are part of India's long-term strategy through Production Linked Incentive (PLI) schemes.
- PLI Scheme: Launched 2020–21; covers 14 sectors including pharmaceuticals, medical devices, textiles (man-made fibres and technical textiles), electronics, food processing, specialty chemicals, and defence
- PLI purpose: Incentivise domestic manufacturing, reduce import dependence, and improve export competitiveness; provides 4–6% cash incentive on incremental sales over a base year
- Key sectors eligible for PLI that are affected by US tariffs: Pharmaceuticals (bulk drugs + formulations), electronics (smartphones, components), textiles, food processing
- Special Economic Zones (SEZs): Governed by SEZ Act, 2005; provide tax concessions for export-oriented units; relevant for IT and manufacturing exports
- India's export target under FTP 2023: Merchandise exports of USD 1 trillion by 2030; services exports of USD 1 trillion by 2030
Connection to this news: PLI-backed sectors — especially pharmaceuticals and electronics — are directly affected by the trajectory of US tariffs. A lower 15% tariff improves their competitive position against non-PLI beneficiaries in rival countries.
Key Facts & Data
- New US global tariff (Trade Act of 1974): 15% (raised from 10% announced day of Supreme Court ruling)
- Previous IEEPA-based reciprocal tariff on India: up to 26% — now struck down
- BTA interim framework tariff: 18% (now effectively superseded by 15% global tariff)
- Section 232 steel tariff: 25% — still in force
- Section 232 aluminium tariff: 10% — still in force
- India's total goods exports to the US (FY25): US$ 86.51 billion
- US share of India's total goods exports: approximately 17–18% (largest single country destination)
- FTP 2023 targets: USD 2 trillion total exports by 2030 (merchandise + services)
- PLI scheme: 14 sectors; launched 2020–21; approximately Rs. 1.97 lakh crore total outlay
- RoDTEP: Replaces MEIS; provides embedded tax refunds to Indian exporters sector-wise