India's Response to Trump's Tariffs: A Delicate Balancing Act

International News:  The Indian government has decided not to retaliate against US President Donald Trump's 26% tariff on imports from the country, citing ongoing trade talks between the two nations. This move comes as a surprise, given the potential impact of the tariffs on India's economy.

Early Trade Talks Give India an Edge

India's decision to engage in early trade talks with the US may give it an advantage over other countries like China, Vietnam, and Indonesia, which have been hit harder by higher US tariffs. By positioning itself ahead of regional rivals, New Delhi is better placed to negotiate favorable terms.

No Counter Tariffs for India

India joins countries like Taiwan and Indonesia in skipping counter tariffs, despite the European Commission's plans to impose extra duties on US products following China's retaliation. This decision reflects India's efforts to ease trade tensions with the US.

Concessions to Ease Trade Tensions

The Modi administration has made several concessions to the US, including:

- Cutting tariffs on high-end bikes and bourbon: A move to reduce trade barriers and increase imports from the US.

- Scrapping the digital services tax: A decision that benefits American tech giants and aims to ease trade tensions.

Potential Economic Impact

Economists warn that Trump's tariffs could have a significant impact on India's economy, including..

- Denting economic growth: A potential decline of 20-40 basis points in India's economic growth this financial year.

- Impact on the diamond industry: Thousands of jobs could be threatened, as over a third of India's diamond exports go to the US.