Union Commerce and Industry Minister Piyush Goyal has sought to reassure businesses that India is engaged in active negotiations with the United States following President Donald Trump’s decision to impose a steep 50% tariff on Indian exports. Goyal emphasised that while the new duties are significant, there is “no need to panic” and expressed confidence that both countries will reach a fair settlement.
Speaking to ANI on Thursday, Goyal said, “We continue to have good relations with the United States, and I am sure we will be able to resolve these issues and come to an equitable, balanced and fair agreement.”
No Timelines, Long-Term Focus
When asked about the timeframe, the minister underlined that deadlines rarely bind trade negotiations.
“There is never a timeline in negotiations. You should do it patiently, as you are doing it for the long term,” he added.
The U.S. tariffs were implemented in two stages: an initial 25% duty, followed by an additional 25%, citing India’s continued imports of Russian crude oil. The secondary tariff took effect on August 27 and now applies to all Indian goods either imported for consumption in the U.S. or withdrawn from bonded warehouses.
GST Reforms Coincide With U.S. Tariffs
Interestingly, the U.S. tariff announcement coincided with major changes to India’s Goods and Services Tax (GST) structure. Clarifying the overlap, Goyal said this was “a matter of chance.” He pointed out that work on tax reforms had been underway for months, involving a group led by the Finance Minister, secretaries, and ministers.
On September 3, Finance Minister Nirmala Sitharaman announced the decisions of the 56th GST Council meeting. Key changes include:
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Simplified slabs: GST rationalised into two main categories—5% and 18%—by merging the earlier 12% and 28% brackets.
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End of compensation cess: Applied earlier on coal, carbonated fruit-based beverages, and mid- to large-sized cars.
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Luxury and sin goods: Retained at 40%, covering tobacco, pan masala, aerated sugary drinks, luxury cars, high-end motorcycles, yachts, and helicopters.
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Exemptions continue: Essential goods, kitchen staples, agricultural equipment, handicrafts, medical equipment, and insurance (health, family floater, life) remain fully exempt.
For Indian exporters, the 50% tariff poses immediate challenges, particularly for sectors already under margin pressures. However, Goyal’s comments suggest New Delhi is banking on its broader strategic and trade ties with Washington to prevent lasting damage.
As India simultaneously advances tax reform at home, the government appears keen to project stability and policy continuity despite external headwinds. The coming weeks of U.S.-India negotiations will be critical in determining whether the steep tariffs remain a temporary setback or evolve into a prolonged trade dispute.
