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SCENARIOS: India-US tariff standoff - What are New Delhi’s options and risk?

India will likely be one of the worst-hit countries by Donald Trump's trade war, as tariffs on Indian imports are set to increase to 50% if no deal is reached in three weeks.

Here are some options that India can use to address the crisis.

Negotiate further. India was expected as one of the first countries in line to sign a deal with Trump’s team. However, after five rounds of talks over disagreements about opening India's dairy and farm sectors and stopping Russian purchases of oil, negotiations fell through.

New Delhi is reacting strongly to the tariff of 50% on U.S. imported goods from India. This could effectively stall trade. Indian officials remain hopeful that the closed-door discussions will resolve some of their differences. A U.S. Trade team is expected in the Indian capital at the end of this month. The Prime Minister Narendra Modi stated on Thursday that, while he did not mention the tariffs in his remarks, he was willing to "pay a high price" to ensure the welfare of India's dairy sector, farmers and fishermen.

Indian officials have stated that they are willing to reduce tariffs on some U.S. dairy and farm products, such as almonds and cheese.

CUT RUSSIAN IMPORTS India is the third largest oil importer in the world. It has previously stated that it would find alternative oil sources if Russia's imports became unworkable due to sanctions, or for other reasons. The country bought very little Russian oil prior to the Ukraine conflict that began in 2022. But now, it gets over a third its oil imports through its old trade partner and defense partner.

Reports from late last month indicated that Indian refiners, such as Indian Oil and Hindustan Petroleum as well as Bharat Petroleum, Mangalore Refinery Petrochemical and Mangalore Refinery Petrochemical, had stopped purchasing Russian oil due to the shrinking discounts and increasing pressure by Trump. Officials have warned, however, of global price spikes without Russian oil on the market.

Other big suppliers of goods to India include Iraq, Saudi Arabia, and the United Arab Emirates. These are all part of annual agreements that allow for the flexibility to order more supplies every month.

India imports goods from around 40 countries, which includes the United States.

Band Together with Other Developing Countries

Brazil is also a major target of Trump's tariffs, along with India. Both countries are founding members in the BRICS group, which also includes China and Russia. Brazilian President Luiz Inacio Lula da Silva who currently holds the BRICS presidency said that he will call Modi and China's Xi Jinping on Thursday, and then other leaders to discuss how the BRICS bloc would respond to tariffs.

A source in the Indian government said that India must gradually repair its ties with the U.S., while also engaging with other nations who have been affected by Trump's tariffs on aid and his cuts to the African Union.

India has already made some moves with Russia and China.

The Indian national security advisor is currently in Moscow, and the Foreign Minister will follow. This is ahead of President Vladimir Putin's anticipated visit to New Delhi later this year. Russia announced on Tuesday that the two countries had discussed a further strengthening of defence cooperation in the form "of a particularly priviledged strategic partnership".

India has also increased engagement with China. This is a significant change from the years of tensions that followed a border clash in 2020. Modi will visit China for the first since 2018, for a summit of a security conference in the region. This could be the first meeting between Modi, Putin, and China's Xi Jinping.

Recently, the Indian Defence and Foreign Ministers visited China.

What are the consequences for India if talks fail?

India exported goods worth around $87 billion to the United States in the fiscal period ended March 2025, including garments. About 2% of India’s GDP is accounted for by these products.

The proposed duty of 50% on Indian goods may result in the pharmaceutical exports from India being the only ones still sent to the U.S.

Not just trade will be at risk. Analysts predict tensions will spill over into areas such as work visas and offshoring services. India has been a major beneficiary from U.S. visa programs and outsourcing of business and software services. This is a source of frustration for Americans, who have lost their jobs because of cheaper workers in India. Reporting by Krishna N. Das in New Delhi, Nidhi verma, Manoj kumar and Aftab ahmed, with editing by Raju Gopalakrishnan

(source: Reuters)