ALSO READTrump tariff could impact India’s GDP by up to 60 bps: CEA
The minister said India wants to work with countries where both parties could have “a win-win deal” and not a one-sided agreement, without naming any particular country in this context.
Markets cheer conciliatory signals
The development helped the Sensex to climb 0.4% on Wednesday, its third straight day of gain. Rising for the sixth consecutive day, NSE Nifty closed 0.42% higher.
Trump’s statement on Tuesday was the first by him expressing a desire to take the stalled BTA talks with India forward, after he on August 6 issued an executive order doubling the additional tariff on India to 50%, for buying Russian oil. Both Trump and officials from his administration have been sharply vocal against India for weeks on, for its alleged high tariffs, and even singling out the country for keeping trade relations with Russia The full extra tariff has been effective from August 27 covering more than 60% of India’s merchandise exports to the US; the initial reciprocal levy of 25% came into effect on August 7.
“I feel certain that there will be no difficulty in coming to a successful conclusion for both of our Great Countries,” Trump posted on Truth Social. Modi reciprocated by saying Washington and New Delhi “are close friends and natural partners.” He added that both countries are working to conclude the trade discussions at the earliest.
“I am also looking forward to speaking with President Trump. We will work together to secure a brighter, more prosperous future for both our people,” Modi said.
Tariffs remain sticking point
The negotiations on the first tranche of the BTA between India and the US had come to a standstill after Trump announced additional 25% tariffs on India for Russian oil purchases. The US team that was to visit India for the sixth round of negotiations from August 25, cancelled its visit. Despite the pause on negotiations, both sides continued to engage through officials.
Trump and other US officials have criticised India for continuing to buy crude oil from Russia and even threatened to take tariffs to even higher levels. Despite the provocations India did not retaliate or make any adverse remarks, but the leaders actively started advocating use of locally made products.
Even as the ice melted due to the warmth exhibited by both sides, Financial Times reported that Trump has asked the European Union to impose tariffs of up to 100 per cent on India and China as part of a joint effort to increase pressure on Russia to end its war in Ukraine.
The Indian side has held that for the talks to resume both the tariffs (25% reciprocal tariff and 25% for purchase of Russian oil) need to be addressed first. The 25% reciprocal tariffs came into force from August 7 and the additional duties became effective from August 27.
The possibility of early resumption of trade talks has come as a relief to the markets and exporters who are facing a big drop in shipments to their biggest overseas market.
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US tariffs could slash India’s exports to around $50 billion in FY26, down 43% from $86.5 billion in FY25. This drop will also weigh on the economy and drag down overall growth by 0.5-0.6% in the current financial year, according to Chief Economic Advisor V Anantha Nageswaran. Net of the positive impact from the Goods and Services Tax reforms, the FY26 growth loss is seen by him at 0.2-0.3%.
The June 17 call between Modi and Trump was the last direct reported engagement between the two leaders before the recent exchanges on social media. In that call, the US role in ending the India-Pakistan conflict and Nobel nomination for the President came up and reportedly led to souring of ties.
Despite that call other engagements on defence and related matters continued. In that period there were reports that Trump tried four times to speak to Modi over phone but the leaders did not connect.