India can strengthen exports in sectors that remain insulated from US-China trade: FIEO

According to Ralhan, India could focus on Active Pharmaceutical Ingredients (APIs), gems and jewellery, engineering goods, organic chemicals, and IT-enabled services.

The Federation of Indian Export Organisations (FIEO) said it closely monitors global trade developments that affect Indian trade interests.

The US and China have arrived at an agreement that they will withdraw their previously announced reciprocal tariffs and counter tariffs for an initial period of 90 days.

China will reduce tariffs on US goods from 125 per cent to 10 per cent, and the US proposes to cut tariffs on Chinese goods from 145 per cent to 30 per cent. The understanding was reached by recognising the importance of their bilateral economic and trade relationship to both countries and the global economy, as per a joint statement on Monday.

The reduction in tariffs represents a significant thaw in trade tensions between the two largest economies, Ralhan said.

FIEO President recognises that while such developments are broadly positive for global trade stability, they present both challenges and opportunities for India.

Ralhan added that the reduction in tariffs will likely result in a surge in US-China bilateral trade in high-value segments such as electronics, machinery, and chemicals.

"This may intensify competition for Indian exporters in third markets like Southeast Asia, Africa, and Latin America, where India has recently made inroads capitalising on US-China trade disruptions," FIEO said.

At this point, India must proactively engage with the US to secure and expand its preferential trade access, emphasising its role as a reliable alternate sourcing destination.

The temporary nature of the tariff cuts may lead companies to hedge against future volatility by expanding manufacturing in India under the 'Make in India' and PLI schemes, especially in electronics, auto components, and textiles, said Ralhan.

The FIEO chief added that FIEO will navigate this evolving landscape and will continue to work with policymakers to ensure India's trade interests are protected and promoted.

US President Donald Trump had imposed reciprocal tariffs on dozens of countries with which the US has a trade deficit. Later, President Trump decided to pause the tariffs for 90 days after many countries initiated talks with the US administration for a trade deal. In these 90 days starting April 9, President Trump imposes a 10 per cent baseline tariff on all countries.

For China, Trump once indicated that tariffs may go as high as 245 per cent. For the US, Chinese tariffs were at 125 per cent.

Since assuming office for his second term, President Trump has reiterated his stance on tariff reciprocity, emphasising that the United States will match tariffs imposed by other countries, including India, to ensure fair trade.