The United States has imposed an additional 10 per cent duty on Indian goods under Section 301 of the Trade Act, while placing India in the lower tariff bracket.

The Centre described this as a relative advantage for Indian exports and reaffirmed its commitment to concluding the Bilateral Trade Agreement with Washington at the earliest.

The United States Trade Representative announced the final measures on 23 July, following investigations into 60 economies regarding forced labour concerns. The new duty took effect on 24 July, replacing the earlier temporary 10 per cent tariffs that had been in place since February.

India had initially been proposed for a 12.5 per cent tariff but secured the lower rate after sustained engagement with the USTR, including written submissions, consultations and public hearings.

The Commerce Ministry stated that India’s exports to the US, valued at $87.31 billion in 2025–26, will largely remain outside the scope of the additional duty. Exemptions cover generic pharmaceuticals, smartphones and other specified products that continue to attract zero additional tariffs.

Products already subject to Section 232 measures, such as steel, aluminium and auto parts, will not face the new Section 301 duty, though they already carry tariffs of 25 to 50 per cent.

According to estimates, 45 per cent of India’s exports remain exempt, while 55 per cent will be affected by the new levy.

The ministry emphasised that India’s overall tariff incidence remains lower than that of many other economies under investigation. It reiterated that the government is committed to working with the US to conclude the Bilateral Trade Agreement announced earlier this year.

Concerns have been raised by textile exporters, who noted that India has not received the tariff-rate quota exemption under the new regime. This exemption benefits Bangladesh, Cambodia, Indonesia and Malaysia, allowing them to export textiles made from US-origin cotton at concessional rates for three years.

Industry experts warned that this could encourage Bangladeshi manufacturers to source cotton directly from the US, potentially impacting India’s intermediate textile exports. The Confederation of Indian Textile Industry expressed serious concern, highlighting that the US is India’s largest market for textile and apparel exports, valued at around $11 billion annually.

Commerce Minister Piyush Goyal had earlier expressed confidence that India would secure concessional duty access for garments made using American yarn and cotton under the proposed trade agreement, similar to the benefits extended to Bangladesh.

The additional 10 per cent tariff applies over and above existing MFN duties. For example, a shirt currently attracting a 5 per cent duty will now face a total tariff of 15 per cent.

India was placed in the lower bracket after amending its Foreign Trade Policy in July to prohibit imports of goods produced using forced labour. The US acknowledged this step and imposed the reduced duty. However, a separate Section 301 investigation into excess industrial capacity remains pending, with potential for further tariffs on industrial products once findings are announced.

India and the US continue negotiations on the Bilateral Trade Agreement, having already finalised a framework for the first phase. India is seeking competitive tariff advantages over peer economies as talks progress.

Agencies