US-India Tariff Tension a Threat or Turning Point for Northeast Exports?

Despite global concerns surrounding tariff policies under the previous US administration, exports from India’s North Eastern Region (NER) to the United States remain unaffected — at least for now.

"The US tariff decision has no immediate impact on exports from the Northeast. With a 90-day deferral in place, we remain hopeful that the upcoming bilateral trade discussions will lead to a favourable resolution," said an official from the Export Promotion Council for Handicrafts (EPCH) to Priyanka Chakrabarty for Business North East.

Bilateral Trade Agreement in the Pipeline

Echoing these sentiments, the Assistant Resident Director of the North East Region chapter of the PHD Chamber of Commerce and Industry (PHDCCI), Meghmala Choudhury, stated that the NER Chapter views the recent US tariffs as a call to action for North Eastern businesses to accelerate their transformation into hubs of innovation.

"While sectors like tea, handicrafts, and agri-exports may face immediate challenges, we remain optimistic. Analysis shows only a minimal 0.1 per cent short-term reduction in India's GDP from the reciprocal tariffs imposed by the Trump administration. This reaffirms our belief in the region's ability to adapt and emerge stronger,” said Choudhury.

“The NER Chapter is committed to working with policymakers and businesses to turn challenges into opportunities, thus strengthening economic resilience in the region,” noted the PHDCCI official.

Zero-Duty Imports and the PLI Scheme

Meanwhile, India has been witnessing zero-duty imports from the US across several sectors, including those supported by the Production Linked Incentive (PLI) scheme, a part of India’s broader efforts to expedite a bilateral trade agreement and reverse reciprocal tariffs.

However, the deal depends on strict rules of origin, including a requirement for 30-40 per cent value addition and tariff heading modifications, to prevent third-country products from entering India through the US at reduced or zero duties.

India’s PLI scheme currently encompasses 14 sectors, with a budget allocation of Rs. 1.97 lakh crore, covering industries such as mobile phones, white goods, automobiles, drones, textiles, speciality steel, and pharmaceuticals.

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Ongoing Discussions and Future Plans

“Inter-ministerial consultations are ongoing to determine what India can offer under the proposed bilateral trade agreement,” a source familiar with the matter told ET. “Zero-for-zero tariffs could benefit several sectors, particularly those where India has a labour cost advantage.”

Government departments are actively seeking industry input regarding tariff reductions, and numerous industry associations have urged the government to expedite BTA negotiations. The initial phase of the agreement is expected to be completed within the next six months, with a finalized pact targeted for fall 2025.

The bilateral trade target between India and the US aims to surpass USD 500 billion by 2030 — more than double the current trade figures. Government representatives indicated that many domestic producers, especially with the PLI’s post-manufacturing incentives, can sustain operations without the need for import duties. The potential introduction of zero-duty tariffs is expected to provide a competitive advantage for Indian products in global value chains, further supporting the “Make in India” initiative and providing broader access to the US market.