BRIEF

The Provincial Globalists: How States are Rewriting Trade Diplomacy

Rohit Gupta — Fri, 03 Jul 2026 21:58:53 +0000

Krishangi Kathotia

Research Assistant

1. INTRODUCTION

Apple’s export of iPhones from India crossed USD 23 billion 2025[i], with an 85 percent jump from the previous year. India’s Foreign Direct Investments (FDI) crossed the threshold of USD 1.4 trillion between April 2000 and December 2025[ii]. These stories did not emerge simply in New Delhi and what had actually unfolded was the radical decentralisation of trade diplomacy in India. It is the state capitals – Gandhinagar, Chennai, Bengaluru, Kolkata and Mumbai among others that are negotiating, incentivising and closing deals with their global counterparts. Many Indian states are assembling dedicated semiconductor missions, organising domestic investment summits with 100+ participants and participating in the ones abroad in London and Berlin. These states are now provincial globalists with their own strategic outlook to engage with the world.

These interactions are best understood through the lens of para-diplomacy. It refers to the international engagement of subnational governments to advance their economic, political or cultural interests while operating within the constitutional framework of the national government. Unlike foreign policy, which remains the exclusive domain of the Central government in India, para-diplomacy focuses on areas such as trade promotion, investment attraction and economic cooperation. In India, it has emerged as a significant feature of competitive federalism, with states increasingly acting as economic diplomats in pursuit of development, especially as the global supply chain shift towards China+1 options is accelerating.

[i] https://www.outlookbusiness.com/corporate/apples-iphone-exports-from-india-cross-2-tn-mark-in-2025-a-first-ever-milestone

[ii] https://www.dpiit.gov.in/static/uploads/2026/02/6dc3e8a9fe52d5a412d8e5f41d7b921f.pdf

1.1 THE CHINA+1 WAVE

COVID-19 and the recent trade tensions due to the U.S. tariffs and the Hormuz blockade exposed the fragility of the global supply chain system and the dependence on a single manufacturing hub. This led to multinationals building supply chains elsewhere to secure their global supplies. India became an obvious candidate due to its market and governance structures. This is reflected in the FDIs that India has been able to procure recently. Figure 1 shows that in 2024-25, the FDI equity inflow touched USD 50 billion with a 13 percent rise over the previous year[i]. The total FDI inflow also touched USD 80.6 billion. It also reflects that manufacturing FDIs are a rising sector but non-manufacturing sectors still dominate the equity inflows in India, owing to the expanding service sector.

[i] https://www.dpiit.gov.in/static/uploads/2025/12/9d8c06e0fef51833b8f2eabfeccc6f44.pdf

Figure 1, author’s computation from DPIIT data

1.2 STATES HAVE BEEN RUNNING THEIR OWN FOREIGN POLICY FOR TWENTY YEARS

The FDI inflows did not begin with China+1 strategies. It started in the 1990s itself, after India opened its doors to the world through liberalisation policies. The pioneers have been Gujarat, Maharashtra, Tamil Nadu and Karnataka. Gujarat began the “Vibrant Gujarat Global Summit,” launched by then Chief Minister Narendra Modi. This brand building and foreign engagement became the template for everyone.

Other states also followed, with Tamil Nadu leveraging its port infrastructure and industrial base to build relations and receive investments from European and Asian partner countries. Maharashtra has remained India’s FDI champion, drawing more than USD 19 billion in equity 2024-25, which is about 39.1 percent of the national total. The state continues to leverage its financial infrastructure and highly sophisticated workforce[i] to create a favourable business environment for investments. Karnataka followed at 13.2 percent of the national total due to its positioning as the Silicon Valley of the East. These trends demonstrate that while this competitive federalism has brought out significant investment outcomes, there might be a disproportionate concentration of investments in a small group of states and balancing that becomes a policy priority.

Earlier this year, even Telangana followed by securing investments at Davos[ii] worth almost USD 3.6 billion, focusing on hardware development, clean energy and green manufacturing, including Small Modular Nuclear Reactor – all resulting in employment generation as well. Before 2014, Telangana did not exist as a separate state and did not have its own FDI track record, and yet, it has been a breakthrough state in terms of attracting FDIs across technology, pharma and life sciences, electronics, global capability centres among other industries. With a growing service sector industry, Telangana has carved its position as a top 10 state (see figure 2) in FDIs over the past few years, closely tailing giants such as Maharashtra, Karnataka and Gujarat. Telangana’s cumulative FDIs form October 2019 to June 2025 have been valued at USD 11.2 billion.

Uttar Pradesh, which is now also in the top 10 (see figure 2) has also emerged as a promising destination for FDIs. investment. Between 2000 and 2017, the state attracted only around USD 460 million in FDI. In contrast, it received approximately USD 1.33 billion in foreign investment between 2019 and June 2023 alone, nearly three times the inflows recorded over the preceding 17 years[iii]. most recently, the numbers touched USD 660 million just between April-September 2025. This noticeable rise is due to sector-specific industrial policies and incentives, especially with a push for the manufacturing sector. It has also been complemented by rapid expansion of infrastructure in the state, including key expressways and the launch of Jewar and Hindon Airports.

[i] https://maitri.maharashtra.gov.in/explore-maharashtra/fdi-in-maharashtra/

[ii] https://newsonair.gov.in/telangana-signs-major-mous-worth-nearly-%E2%82%B930000-crore-at-davos-world-economic-forum/

[iii] https://invest.up.gov.in/wp-content/uploads/2023/09/up-witnes_060923.pdf

1.3 THE CONCENTRATION PROBLEM

Looking at the FDI inflows for 2024-25 and 2025-26 (Until dec’25)[i], it is evident that Maharashtra and Karnataka have absorbed more than half of the national total FDI equity inflows, at 52-55 percent. If we add the totals of Gujarat, Delhi, Tamil Nadu and Telangana to this, it covers almost the entire total of equity flows. The remaining states, sometimes bigger in area and population, have received comparatively much lesser in investments. It is important to look at why some states are clear winners in the bid for FDIs and why some states are lagging behind.

[i] https://www.dpiit.gov.in/static/uploads/2026/04/964449b16fca5b00383bfb5152e9d729.pdf

Figure 2: High-FDI states, DPIIT and India Briefing

Figure 3: FDI distribution, DPIIT Data[i]

[i] https://master-dpiit.digifootprint.gov.in/static/uploads/2025/07/e2bb4f932fd89685e14725168641ff6f.pdf

The map in figure 3, complemented by figure 2 shows a highly uneven distribution of FDIs across Indian states, with Maharashtra receiving the highest inflow closely followed by Gujarat and Karnataka, mainly towards India Southeastern belt. Other states have received comparatively smaller levels of Foreign Investments. This also indicated that there is a pattern of Investments being channelled towards states that are already industrially developed and economically advanced, with well-established business ecosystems, rather than states that might have to build upon this from scratch.

1.3.1 Karnataka: converting a talent ecosystem to investments

Karnataka was one of the few states that were credited for the iPhone exports worth USD 23 billion in 2025. It has been the top destination for FDIs, being at the receiving end of 21 percent of the national total FDIs between October 2019 and June 2025 at almost USD 65 billion[i]. The government of Karnataka provides the investors with a flexible choice between a capital subsidy and the Production Linked Incentive Scheme (PLI), but that is not the only reason why Karnataka took off. It is because of an ecosystem of advantage build over decades.

Bengaluru currently hosts 40 percent of India’s Global Capability Centers (GCCs), with a plan to double this number by 2029. The city also has 400 out of the total of Fortune 500 companies and contributes 39 percent to India’s total IT exports. Investment promotion is also now directed towards North Karnataka to ensure overall state development beyond the capital.[ii] Karnataka has treated its talent ecosystem as a product itself, and has built a policy architecture to leverage that globally. Services, Software and Hardware, Automobiles and the Education Sectors in Karnataka attract the highest FDIs from American, Southeast Asian and European giants.

[i] https://www.dpiit.gov.in/static/uploads/2025/11/4128971a6c7fd4a7653ca9e648a5f34b.pdf

[ii] https://investkarnataka.co.in/wp-content/uploads/2025/02/IndustrialPolicy2025_PrintPagesSingle_.pdf

1.3.2 Gujarat: leading with EoDB frameworks

Gujarat’s advantages are not its subsidies or low-cost land availability; it is the frictionless execution. The state became the first one to launch its own semiconductor policies in 2022, even before the national mission shaped into what we see today. The state’s framework to secure mega investment projects like the Micron ATMP facility worth USD2.75 billion has been based on few core principles. It provides dual port access through Kandla and Mundra, along with a single-window clearance process with the Micron plant inaugurated within 90 days of signing the deal. The plant was also planned to receive 70 percent of the total cost as subsidy[i]. Three major semiconductor projects have since followed, totalling roughly USD 15 billion in announced investment by the government.

Gujarat has been India’s flagship lesson in effective industrial policy, with the clearance and implementation window being even faster than the national average, without any possible bureaucratic delays. In Gujarat’s case, the product is the speed of approval which has been able to give it a competitive advantage.

[i] https://www.eenewseurope.com/en/india-will-pay-for-70-of-microns-2-75-billion-packaging-plant/

1.3.3 Madhya Pradesh: A policy on paper, an ecosystem still catching up

Madhya Pradesh is not simply a case of low-FDI numbers. It displays how a policy on paper might exist without the appropriate execution capacity, and negate the entire prospects of what the FDI policies might offer. Madhya Pradesh is often clubbed with Jharkhand, Bihar and other states on the other end of the FDI matrix, receiving little to no interest due to limited industrialisation, weaker infrastructure and relatively more constrained market access as compared to the leading states.

The state government has not been passive with its Industrial Promotion Policy (2025) and its biennial global investor summits that provide with capital subsidies, support with freight and logistics, research and development reimbursements and sector-specific schemes. On paper, it does provide with a regulatory framework to procure FDIs, but the reputation required to operationalise this – through successful experiences – has been missing. There is no flagship investment project, no nodal city advertised as the hub, no specific pre-established industry, all adding to the lack of a tested framework for an investor to ensure the credibility of investing into the state. This gap matters because a state lacking a proven track record has to work harder to receive each subsequent deal even with a strong policy in place.

1.4 LESSONS TO BE LEARNT

It is not just resources or geography that dictate the inflow of FDIs into historically low-FDI states like Madhya Pradesh. The scope of execution as well as credibility can transform the way these states interact with the world. Karnataka and Gujarat’s cases provide a framework for other states to operate in. Here are six lessons that rising and low-FDI states can adapt from the successful ones:

*State*	What It Did Differently	How Aspiring States Can Adapt It
Gujarat	Made regulatory speed itself the pitch with single-window clearance, dual-port access via Kandla and Mundra, and a semiconductor policy launched years ahead of the national mission. Also developed dedicated freight corridors (DFCs) to ensure seamless logistics.	Have mandated clearance timelines, create a single-window authority with the power to sign off across departments; build a flagship project to set a credible track record. Focus on reducing the cost of logistics through infrastructural and policy development.
Karnataka	Spent years on perfecting one core product – talent. Decades of IT and education investment layered with a flexible capital-subsidy-or-PLI choice and a push to decentralise beyond Bengaluru.	States can start smaller: anchor one sector’s skilling pipeline through technical institutes and university-industry partnerships, and decentralise beyond the primary city early rather than after congestion forces the issue.
Uttar Pradesh	Pairing sector-specific industrial incentives with rapid infrastructure growth and development expressways, airports and manufacturing facilities, reversing years of underperformance. Logistics sector has industry status, thus reducing overall duties and associated costs.	Instead of broader schemes, focus on narrowing down industry or sector-specific needs and build incentivisation schemes accordingly. Also, start focusing on infrastructural development as early as possible, before it becomes a requirement from the investor’s side. Focus on reducing the cost of logistics through a structured policy.
Tamil Nadu	Leveraged four ports and dense industrial corridors to establish auto, electronics, and leather manufacturing FDI, with single-window clearance on the land acquisition process with a land bank of 40,000 acres. The state also provides a reimbursement on the movement of capital goods.	Pre-develop usable lands as industrial zones so that investors can begin construction and usage immediately rather than having to wait for land acquisition after investments. Reduce the cost of logistics through subsidies to ensure trade growth and export promotions.
Maharashtra	Combined pre-existing financial infrastructure with a highly skilled workforce to sustain its position as India’s top overall FDI destination.	Invest in higher education and vocational alignment with target sectors so “skilled labour availability” becomes part of the state’s brand before the pitch is made.
Telangana	Entered the FDI race late, only after 2014 statehood, but built a track record fast by targeting forward-looking sectors such as hardware, clean energy, Small Modular Nuclear Reactors, and directly engaging with the world at platforms like World Economic Forum in Davos.	Focus on a few sectors and specifically develop those, even with no past history of working on them. Additionally, focus on global outreach and a robust investment promotion department so that every investment becomes a credibility proof for acquiring the next one.

1.5 CONCLUSION

Supply chain diversification is not a permanent feature of global politics and the global economy. We are at the cusp of defining times in terms of what might become permanent for India’s manufacturing geography and establish its position as a global manufacturing hub.

National policy alone cannot decide how much of this opportunity can India actually capture, and keep for the long term. This comes down to the quality of subnational diplomacy – whether state governments can promote the state as a favourable destination, find the right investors, make deliverable commitments and actually building what is required to deliver those commitments. Some states who have actually fulfilled most of these – such as Karnataka, Maharashtra and Gujarat, are going to be the anchors of India’s next phase of industrialisation. The others, must catch up on the lost time to actualise this supply chain diversification opportunity, and receive strategic support from the central government to provide a level playing field. A state like Madhya Pradesh or Jharkhand can replicate single-clearance models or investment promotion schemes but it cannot replicate Gujarat’s dual-port access or Karnataka’s decades of talent building and accumulation. Here, the center can intervene to ensure the right capacity building to prevent competitive federalism from turning into interstate competition.

India’s foreign economic policy, in this sense, is never crafted in boardrooms of New Delhi. It is deliberated in the CM’s offices in Chennai, Hyderabad, Bengaluru and Gandhinagar, at their investor summits and is reflected in the MoUs that they are able to negotiate and sign, and convert into investments that change the game.

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Shahnawaz Qadri

Rohit Gupta — Wed, 01 Jul 2026 08:38:09 +0000

Research Consultant

An academic with more than 13 years of experience in research, policy analysis and teaching. Proven expertise in qualitative research, data synthesis, and policy analysis, with a focus on Sustainable Development and Environment; Humanitarian aid politics; Women Empowerment, Geopolitical Risk Assessment; and foreign relations. Dr. Qadri has taught international relations at various colleges and Universities.

Research & Policy interests: Dr. Qadri’s research interests include Environmental Governance, Planning and strategies; Women engagement; Aid Assistance & Collective Action. Technical experience in Qualitative and Quantitative Data Analysis & Data interpretation. He has expertise in Project Coordination, Communication & Management, Report Writing, Synopsis/Proposals.

Publications: Qadri has published research papers, books and book chapters in various National and International publishers on various themes. His UN’s Sustainable Development Goals: Planning strategies for equitable financing and world sustainability-(Springer-Nature); Humanitarian Aid: Global Aid politics and Assistance (World Research Journal-An International Journal); Disaster Risk Governance-A study of Kashmir Floods 2014 (South Asia Journal) Constitutionalism in India: A comparative analytical study of social issues within constitutional mechanism.

International Issues: India’s Geo-strategic policy in Afghanistan: Aid and reconstruction; Central Asian and Regional Development, The New Great Game: power, politics and Oil (World Focus)

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Manya

Rohit Gupta — Thu, 18 Jun 2026 21:03:18 +0000

Research Assistant

Manya is a trade and policy researcher with a focus on how infrastructure, agreements, and global corridors shape India’s economic relationships. Holding a Bachelor of Commerce (Honours) degree from the University of Delhi, she brings a grounding in finance, economics, and statistical analysis to her work.

At BRIEF, her work cuts across port dynamics, customs efficiency, and emerging trade architectures, bringing an analytical perspective to India’s evolving role in global supply chains and international trade policy.

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Measurement of Cost of Regulation in India – Eastern Region

briefindia — Fri, 16 Jan 2026 22:49:13 +0000

BRIEF supported the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, Government of India, in conducting the Measurement of Cost of Regulation (CoR) study across five eastern states—Odisha, Jharkhand, West Bengal, Chhattisgarh, and Bihar. The study aimed to systematically quantify the time, financial, and procedural burden faced by businesses while complying with regulatory approvals and licences, and to identify opportunities to streamline processes and improve the ease of doing business.

The assessment covered 13 key regulatory services, including land allotment, building and factory plan approvals, fire and factory licences, environmental clearances, consents to establish and operate, and utility connections. BRIEF implemented a robust mixed-methods approach, combining large-scale quantitative surveys of enterprises with focus group discussions involving industry stakeholders and experts. The analysis examined time costs, substantive compliance costs, intermediary costs, statutory fees, inspection practices, and delay-related impacts, highlighting systemic inefficiencies, reliance on intermediaries, documentation challenges, and digital platform constraints.

Findings from the multi-state assessment provided comparative, evidence-based insights into regulatory performance across states and informed actionable recommendations on process simplification, digitisation, inter-departmental coordination, and service-level standardisation. The study contributed to DPIIT’s broader reform agenda by supporting data-driven policy decisions to reduce compliance burden and strengthen regulatory governance at the state and national levels.

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Mid-Term Evaluation of Watershed Development Component (PMKSY–WDC 2.0), Haryana

briefindia — Fri, 16 Jan 2026 22:47:17 +0000

BRIEF carried out a mid-term evaluation of the Watershed Development Component under Pradhan Mantri Krishi Sinchayee Yojana (PMKSY–WDC 2.0) for the State Level Nodal Agency (SLNA), Rural Development Department, Government of Haryana. The study covered five districts—Bhiwani, Charkhi Dadri, Gurugram, Mahendragarh, and Yamuna Nagar—across nine watershed projects, assessing progress over a total project area of 31,221 hectares with an outlay of ₹80.59 crore.

The evaluation adopted a mixed-methods approach, combining structured household surveys, focus group discussions, key informant interviews, participatory rural appraisal tools, and GIS and remote sensing-based geospatial analysis to assess physical, financial, ecological, and socio-economic outcomes. BRIEF evaluated implementation processes, institutional arrangements, fund utilisation, asset creation, and governance mechanisms, with a strong focus on water security, soil and moisture conservation, agricultural productivity, livelihood enhancement, and community participation. The assessment generated evidence-based findings on achievements, implementation gaps, and sustainability prospects, and provided actionable recommendations to strengthen programme execution, optimise resource use, and support the long-term resilience of watershed interventions in Haryana.

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National Level Monitoring (NLM) – Regular Monitoring, Phase I (2025–26)

briefindia — Fri, 16 Jan 2026 22:43:59 +0000

BRIEF conducted district-level monitoring under the National Level Monitoring (NLM) system for the Ministry of Rural Development and Ministry of Panchayati Raj, Government of India, as part of Regular Monitoring 2025–26, Phase I, covering districts in Uttar Pradesh (Raebareli, Siddharth Nagar, Prayagraj, and Pratapgarh) and Punjab (Pathankot and Hoshiarpur). The assignment aimed to independently assess the implementation, transparency, and effectiveness of key rural development programmes through third-party monitoring.

The monitoring exercise followed the prescribed NLM framework and guidelines, involving field visits to selected blocks, gram panchayats, and villages to verify assets, review programme processes, interact with beneficiaries and officials, and assess gender sensitivity in implementation. BRIEF evaluated multiple flagship schemes including MGNREGS, PMAY-G, NSAP, DAY-NRLM, PMGSY, PMKSY–WDC, DDU-GKY, RSETIs, SVAMITVA, and Panchayati Raj institutions. Findings from the monitoring visits were consolidated into district-level reports, providing evidence-based observations, good practices, gaps, and actionable recommendations to support improved programme implementation, accountability, and service delivery.

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Baseline Assessment of Pre-Consumer Textile Waste Management, Ludhiana

briefindia — Fri, 16 Jan 2026 22:41:01 +0000

A study on pre-consumer textile waste management was conducted in Ludhiana, Punjab, India’s largest textile manufacturing hub, for the Council on Energy, Environment and Water (CEEW). The study focused on understanding the scale, composition, and management of pre-consumer textile waste generated across spinning, processing, dyeing, and garment units, and examining existing handling practices, infrastructure gaps, and regulatory challenges within the industrial ecosystem.

The assessment adopted a quantitative, stratified survey approach, covering approximately 350–400 textile units across different industry types, pollution categories, and enterprise sizes. BRIEF designed and implemented digital CAPI-based surveys, engaged with industry associations, waste handlers, recyclers, and government authorities, and carried out rigorous quality control during field implementation. The study generated a robust evidence base on waste flows, stakeholder roles, and systemic bottlenecks, and informed actionable recommendations to support circular economy interventions, policy design, and sustainable industrial waste management practices in Punjab’s textile sector.

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Strengthening Maldives’ Gender Inclusive Initiatives Project – Impact Evaluation

briefindia — Fri, 16 Jan 2026 22:37:18 +0000

BRIEF undertook the baseline survey and impact evaluation of the Strengthening Gender Inclusive Initiatives (SGII) Project in the Maldives for Ernst & Young LLP, with funding support from the Government of Maldives and the Asian Development Bank, across Hulhumalé, Addu City, and Raa Ungoofaaru. The project formed part of a flagship gender equality initiative aligned with SDG 5 and national priorities on gender and social inclusion, aimed at reducing women’s unpaid care burden and strengthening institutional responses to domestic and gender-based violence (DV/GBV).

The evaluation followed a mixed-methods, pre–post design, combining household surveys, in-depth interviews, and focus group discussions to assess the effectiveness of gender-responsive social services, gender-responsive budgeting, aged care and early childcare systems, and the availability and use of gender equality and social inclusion (GESI) statistics. BRIEF led survey implementation, enumerator training, digital data collection using KOBO Toolbox, and quality assurance, working closely with national institutions and local partners to ensure ethical, gender-sensitive, and culturally appropriate research. The findings supported evidence-based policymaking and informed the design and sustainability of future gender-inclusive programmes in the Maldives.

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India US Tariff War

briefindia — Mon, 22 Dec 2025 12:19:41 +0000

Sagnik Samadder|

Senior Research Associate

Tariffs and Trust: Why the U.S.-India Trade Rift Threatens a Strategic Partnership

In late August 2025, the United States took a sharp turn in its economic engagement with India, raising tariffs on Indian imports to as high as 50%[1]. The measure instantly doubled duties on a wide range of goods, from textiles and leather to machinery and gems. It was a move that stunned policymakers and traders alike, marking the steepest escalation in U.S.-India trade tensions in over a decade.

[1] https://cleartax.in/s/us-tariff-on-india

Washington framed the decision as a response to India’s “unfair trade practices” and its continued purchases of discounted Russian oil. New Delhi, however, saw it differently: as an act of economic aggression against a strategic partner. The result is a rapidly widening rift between two democracies that only recently promised to build the world’s most consequential partnership.

Till 2024, the scenario was quite different:

Product category	India tariff on US goods (MFN avg)[1]	US tariff on Indian goods (MFN avg)[2]	Analysis
Agricultural products (overall) Agricultural products (all food, fish, dairy, etc.)	36.7%	5.0%	India’s agri tariffs are among the highest globally; US agri tariffs are low on average but with some very high peaks (esp. dairy, sugar).
Electrical machinery & equipment Electrical machinery and electronic equipment	10.9%	1.2%	Covers HS 85-type products (motors, transformers, electronics, etc.).
Locomotives, aircraft & ships Transport equipment (vehicles, aircraft, vessels, rail)	20.4%	3.4%	Includes motor vehicles as well as aircraft, ships and rolling stock. India’s protection here is much higher.
Textiles (not clothing) Textiles (separate from clothing)	15.9%	8.0%	For apparel, India ≈21.3%, US ≈11.7% under “Clothing”.
Pharma Chemicals (includes organic, inorganic chemicals & many pharmaceuticals)	9.0%	2.7%	Many finished medicines enter the US duty-free or at very low rates; India commonly levies around 10% basic customs duty on pharma plus surcharges, roughly consistent with this average[3].
Precious stones Minerals and metals (includes precious metals/stones; many HS 71 lines are 0%)	9.8%	1.8%	In practice, US duty on many diamonds/gems is 0%; India’s tariffs on gold/jewellery are much higher than this average4.
Fish and aquatic products Fish and fish products	32.8%	0.7%	India treats fish more like a sensitive food product; US fish tariffs are very low on average.
Dairy products	35.6%	16.8%	Both are high by global standards; the US uses tariff-rate quotas, with some out-of-quota rates above 100%.
Plastic materials Chemicals + Rubber, leather & footwear	≈10–16% (Chemicals 9.0%; Rubber/leather/footwear 16.4%)	≈3–4% (Chemicals 2.7%; Rubber/leather/footwear 4.0%)	Plastics (HS 39) sit between chemicals and rubber in classification, so I’ve given a range rather than a single point.
Organic & inorganic materials Chemicals (organic & inorganic chemicals, etc.)	9.0%	2.7%

[1] WTO Tariffs of India on USA

[2] WTO Tariffs of USA on India

[3] Trade Policy Review

A sudden shift in trade dynamics:

One must consider the broader trajectory of U.S.-India relations to understand the shockwaves this decision sent. Over the past decade, the two nations have deepened defence cooperation, aligned on Indo-Pacific strategy, and sought to reduce global dependence on Chinese manufacturing. Yet, on the trade front, friction has never truly disappeared.

India lost its Generalised System of Preferences (GSP)[1] benefits under the Trump administration in 2019, and despite high-level assurances, they were never reinstated. Now, with the second Trump administration in power, Washington’s renewed tariff push suggests that trade protectionism has re-emerged as a defining feature of U.S. policy.

[1] https://economictimes.indiatimes.com/news/economy/foreign-trade/despite-revoking-gsp-status-in-trump-1-0-india-us-trade-surged-trump-2-0-could-continue-the-trend-sbi/articleshow/115199197.cms?from=mdr

For India, which exported USD 79.4 billion[1] worth of goods to the U.S. last year, this decision is not merely an economic setback; it’s a political insult. Commerce Minister Piyush Goyal’s response was uncharacteristically sharp: “India will not bow down.”

[1] BRIEF compilation from WITS Database

The table below provides an example of the various sectors in which India majorly excelled in exports in 2024 (values are showcased in billion USD).

India’s exports far exceed imports from the USA in the pre-tariff year (2024), indicating India’s strong electronics and components export base, possibly including telecom parts, electrical components.

BRIEF compilation from WITS Database semiconductor assemblies, pharmaceuticals, textiles and other items. India exports more in this category, likely from sectors such as aerospace parts and ship components. The USA’s exports include high-tech aerospace machinery, but India still maintains a positive balance here. India is a net exporter, supplying garments, fabrics, and home textiles to the U.S., while imports from the U.S. are minimal. India leads due to its globally competitive generic drug and API industry, though the U.S. also exports some high-value speciality chemicals. Another major surplus category for India is driven by exports of cut and polished diamonds, gold jewellery, and gems. The U.S. exports mainly uncut stones or raw precious metals.

India has a significant advantage, largely from seafood and shrimp exports. U.S. exports in this category are negligible. India exports more agricultural goods to the U.S., such as spices, rice, and tea, while importing limited agricultural produce from the U.S. This is one of the most balanced categories. Both countries trade machinery, but India maintains a slight surplus, possibly reflecting industrial parts and machinery exports. India’s exports are marginal, and imports from the U.S. are almost nonexistent, possibly due to trade restrictions and different sanitary standards. Plastics are one of the few categories where the U.S. slightly outpaces India, showing a narrow deficit for India, reflecting higher-value plastics or polymers imported from the U.S. The data underscores India’s comparative advantage in labour-intensive manufacturing and natural resource-based exports, while the U.S. holds strength in high-value engineered products and polymers.

To understand the depth and distribution of the tariff escalation, it is essential to examine the full structure of U.S. duties imposed during the 1 February-20 November 2025 period. The table below outlines the tiered system, combining country-specific, sector-specific, and emergency-driven measures that form the basis for the sharp increases now impacting Indian exports:

Additional tariffs are currently in effect on top of pre-January 2025 tariffs, based on presidential actions.

Percentage of Tariff	Country-specific tariffs imposed under the International Emergency Economic Powers Act (IEEPA)
+10-41%	Ranging from 10% to 41%, Algeria 30%, Angola 32%, Bangladesh 37%, Bosnia and Herzegovina 35%, Botswana 37%, Brunei 24%, Cambodia 49%, Cameroon 11%, Chad 13%, China 34%, Côte d’Ivoire 21%, Democratic Republic of the Congo 11%, Equatorial Guinea 13%, European Union 20%, Falkland Islands 41%, Fiji 32%, Guyana 38%, India 26%, Indonesia 32%, Iraq 39%, Israel 17%, Japan 24%, Jordan 20%, Kazakhstan 27%, Laos 48%, Lesotho 50%, Libya 31%, Liechtenstein 37%, Madagascar 47%, Malawi 17%, Malaysia 24%, Mauritius 40%, Moldova 31%, Mozambique 16%, Myanmar (Burma) 44%, Namibia 21%, Nauru 30%, Nicaragua 18%, Nigeria 14%, North Macedonia 33%, Norway 15%, Pakistan 29%, Philippines 17%, Serbia 37%, South Africa 30%, South Korea 25%, Sri Lanka 44%, Switzerland 31%, Syria 41%, Taiwan 32%, Thailand 36%, Tunisia 28%, Vanuatu 22%, Venezuela 15%, Vietnam 46%, Zambia 17%, Zimbabwe 18%. (from amendment of Executive Order 14257, Annex I[1]).
Percentage of Tariff	Sector-specific national security tariffs, Section 232 (exempted from country-specific tariffs)[2]
+50%	on iron or steel and derivatives of steel, except for the United Kingdom, 25%
+50%	on aluminium and derivatives; except for the United Kingdom, 25% and the Russian Federation, 200%
+50%	on copper and derivatives
+25%	on automobiles and parts; except for the United Kingdom (≤10%), and the European Union and Japan (≥15%)
+10-25%	on timber, lumber and derivatives; except for the United Kingdom (10%), and the European Union and Japan (≤15%)
+10-25%	on medium- and heavy-duty vehicles, their parts, and buses
Percentage of Tariff	Other tariff treatment pursuant to “deals”, “unilateral preferences” and emergency measures (IEEPA)5
+50%	on goods from India–a 25% country-specific tariff, plus an additional 25% penalty related to oil imports from the Russian Federation
+50%	on goods from Brazil–a 10% country-specific tariff, plus an additional 40% duty related to political reasons, if not exempted
+0-38%	expiry of trade preferences under AGOA for sub-Saharan African economies and the Hope/Help scheme for Haiti on the 30th September 2025
+35%	on non-USMCA-compliant goods from Canada
+25%	on non-USMCA-compliant goods from Mexico
+20%	on goods from China, including Hong Kong SAR–a 10% baseline tariff, plus an additional 10% fentanyl tariff
min 15%	on goods from Japan and the European Union, tariffs increased to 15% if they were lower; for MFN rates apply to certain products
+10%	on non-USMCA originating potash from Canada and Mexico
+10%	on non-USMCA originating energy-related products from Canada

[1] https://public-inspection.federalregister.gov/2025-06063.pdf

[2] UN Trade and Development-Overview of the United States’ tariffs

Taken together, these layered tariff measures translate into sharply uneven impacts across Indian export sectors, the effects of which are detailed in the following section.

In textiles and apparel, India exported USD 8.68 billion worth of goods to the U.S. in 2024. The U.S. imposed tariffs between 45% and 50%[1] (previously 8%), effectively eliminating India’s cost advantage over competitors such as Vietnam and Bangladesh. Analysts at India Briefing (2025) estimate that these hikes could reduce exports by 7-8%, impacting over 45 million MSME workers engaged in the sector[2].

[1] US Tariff on India: Impact, Affected Products, Rates & India’s Response

[2] How US tariffs are unraveling India’s textile industry

The gems and jewellery industry, India’s second-largest export to the U.S., valued at USD 9.15 billion, now faces tariffs of 50%4, up from the pre-2025 rate of 1.8%. The Gems and Jewellery Export Promotion Council (GJEPC) projects losses amounting to USD 3 billion in FY2025-26, particularly impacting diamond polishing hubs in Surat and gold jewellery units in Mumbai[1]. Over 1.7 million workers are at risk due to a potential relocation of U.S. sourcing to Thailand and Hong Kong.

[1] Indian gems, jewellery exports

For pharmaceuticals and chemicals, in September 2025, U.S. President Donald Trump announced a 100% tariff specifically on branded and patented pharmaceutical products, effective since October 1[1]. General tariffs of 25% or 50% were imposed on a broader range of Indian goods, but pharmaceuticals were specifically exempted, directly impacting India’s generic drug exports, which were valued at USD ~8.72 billion every year[2]. According to the Pharmaceutical Export Promotion Council of India (Pharmexcil, 2025), the new tariffs will squeeze the profits for major exporters such as Sun Pharma and Dr Reddy’s, while U.S. healthcare costs could rise correspondingly due to reduced access to low-cost generics[3].

[1] Tariffs on Pharma

[2] Donald Trump’s drug tariff spares generics, but India braces for fallout

[3] Trump’s 100% pharma tariffs

The electrical machinery and industrial equipment category, India’s largest industrial export to the U.S. at USD 18.97 billion, now faces tariffs of 30%4 (previously 1.2%). The Department for Promotion of Industry and Internal Trade (DPIIT) warns that this will erode India’s competitiveness within the China-plus-one diversification strategy, deterring investments in electronics and automotive components.

The marine and agricultural products segment, which includes exports such as seafood, spices, and basmati rice worth USD 2.3 billion, now faces tariffs of 35%4 (previously 0.7%). The Marine Products Export Development Authority (MPEDA, 2025) claimed a shrimp export reduction of 6% (from April – September 2025), due to U.S. importers shifting to Ecuador and Indonesia. This will particularly affect coastal economies in Andhra Pradesh and Gujarat. Therefore, the experts believe to emphasise the need to focus on producing and processing high-value marine products to revive the fisheries sector[1].

[1] Seafood exports, MPEDA

The locomotives, aircraft, and ships segment, covering India’s exports of railway locomotives, aircraft components, and marine vessels valued at USD 3.33 billion, now faces significantly higher U.S. tariff barriers, rising to around 50%6. However, tariffs on aircraft and aircraft components remain minimal or even zero, and, similar to aircraft, India exports very few large fully assembled ships to the U.S. market.

It is self-explanatory that these steep tariff increases, particularly on locomotives and related engineering goods, may prompt U.S. buyers to shift procurement to suppliers in Europe and East Asia. This could erode India’s competitiveness in high-value engineering exports, potentially resulting in substantial revenue losses for Indian manufacturers. The impact would be felt most in the major production clusters of Maharashtra, Tamil Nadu, and Karnataka, where heavy engineering industries are concentrated.

Economic Fallout: Exports in Jeopardy

The sectors most exposed to the tariff blow are precisely those that employ millions of Indian workers. Textiles, leather goods, gems and jewellery, automotive components and machinery will now face prohibitively high duties in their largest export market. For Indian exporters already grappling with tight margins and a strong rupee, this change could be the difference between survival and shutdown.

According to GTRI, due to these tariff increases, shipments dropped to USD 6.31 billion from USD 8.38 billion[1] between May and October 2025, coinciding with the US duties rising from 10% in April to 25% in early August to 50% by late August. The World Bank (2025)[2] projects a 6.3% reduction in Indian exports by FY26-27, saying the impact of US tariffs will dampen growth expected from the cut in GST rates and taxes.

[1] Tariff Shock

[2] World Bank Report

By October 2025, reports from Bloomberg indicated that Washington may reduce tariffs to 15-16% under a proposed bilateral trade recalibration[1]. The draft framework involves reciprocal commitments: India would grant greater U.S. agricultural access (corn, soymeal, and dairy derivatives[2]), while the U.S. would restore Generalised System of Preferences (GSP) benefits and moderate its stance on India’s Russian oil imports. Minister Goyal reiterated that “no deal will be made under pressure” (Hindustan Times, Oct 2025), highlighting India’s sovereignty-first policy stance. Meanwhile, domestic industry bodies such as CII and FIEO have urged the government to extend export subsidies and insurance credit to buffer short-term shocks.

[1] US May Cut India Tariff to 15-16% in Trade Deal

[2] Indian Market Opens for US Farm Goods as Trade Agreement Moves Forward

Next Steps for India to Curb the U.S.-India Tariff War:

A. Trade Architecture & FTA-Driven Measures:

Pursue Early Harvest Agreements: Secure quick tariff stabilisation in mutually dependent sectors, APIs, electronics components, and medical devices before a full FTA.
Negotiate Zero-Tariff Corridors for Critical Goods: Create tariff-free pathways for essential items (pharma APIs, clean energy components, data-centre hardware) to ensure continuity of supply.
Fast-Track Regulatory Alignment for Key Export Sectors: Accelerate U.S. approvals in pharmaceuticals, electronics, and digital equipment in exchange for predictable tariff schedules.
Integrate Value Chains with USMCA (Mexico & Canada): Co-produce goods where rules of origin permit partial Indian inputs, enabling tariff-free U.S. entry under USMCA.
Establish a Joint Tariff Review Mechanism under TPF: Create a technical body to anticipate tariff spikes, detect supply-chain harm, and jointly recommend rollbacks.

B. Sector-specific steps:

Sector	Strategy to be adopted
Textiles & Apparel	1. Negotiate TRQs or Tariff Exemptions for Cotton & MMF Garments: Target high-volume categories where U.S. retail depends on Indian supply. 2. Promote Product Standardisation & Scale Manufacturing: Push standardised SKUs (like basics, MMF staples) to achieve mass production efficiencies. 3. Upgrade to High-Value MMF, Technical Textiles: Move to higher-margin segments less sensitive to tariffs.
Leather & Footwear	1. Increase Value-Added Production: Shift from semi-finished leather to finished goods with higher pricing power. 2. Strengthen Clusters for Shared Processing & Lower Costs: Modernise tanning, finishing and common facilities to achieve cost reductions.
Gems & Jewellery	1. Promote Cutting, Polishing & High-Value Design Exports: Add more value domestically so margins absorb tariff impact. 2. Lower Input Duties on Rough Stones and Machinery: Reduce upfront costs and improve competitiveness in the U.S. market. 3. Expand Digital Retail Channels: Use B2C jewellery e-commerce and direct-to-consumer U.S. platforms to bypass intermediaries and retain price margins.
Automotive Components & Machinery	1. Advance Precision Engineering & Component Upgrading: Move from low-value to high-precision and electronics-integrated components. 2. Develop Scale Through Auto & Engineering Clusters: Reduce per-unit costs with shared testing labs, machining hubs, and logistics parks. 3. Deepen Regional Value Chains for Inputs (ASEAN, Africa, LATAM): Source cheaper metals, forgings, castings, and sub-components to offset tariff impact.
Marine Products (Seafood, Shrimp, Fishery Exports)	Marine: 1. Increase value-added processing (cooked, breaded, ready-to-eat shrimp) to improve margins and absorb tariffs. 2. Diversify export markets toward the EU, Japan, South Korea, and GCC to reduce U.S. dependence. 3. Strengthen cold-chain and port logistics to reduce spoilage and improve delivery speed. 4. Adopt MPEDA-led traceability and certification for premium pricing and lower rejection risks. 5. Develop aquaculture clusters with shared feed mills, labs, and processing centres to reduce per-unit costs. 6. Introduce resilient species and improved broodstock to stabilise output and reduce risk.
Agricultural Products	Agriculture: 1. Increase value-added exports (processed spices, ready-to-cook foods, oilseed derivatives) to raise margins. 2. Strengthen compliance with USDA/FDA standards to reduce rejections and secure stable access. 3. Develop specialised agri-export clusters for rice, spices, and horticulture to lower logistics and processing costs. 4. Expand markets to GCC, EU, and ASEAN to reduce price exposure to U.S. tariffs. 5. Leverage GI-based branding (Basmati, Malabar pepper, Darjeeling tea) to command premium prices.

C. Supply-chain integration with the U.S.:

Promote co-production and joint manufacturing Collaborate with U.S. firms in defence, aerospace, clean-tech, and electronics, making products jointly produced and less likely to face tariffs. In case of defence, India and the U.S. have a decade-long strategic defence framework in place to encourage collaboration on manufacturing and technology sharing. A key example is the planned co-production of GE 414 aero-engines in India. For aerospace, India’s growing aerospace industry, driven by domestic demand for commercial aviation and defence needs, provides a strong incentive for U.S. companies to partner on manufacturing and MRO (Maintenance, Repair, and Overhaul). Electronics and Clean-Tech as a sector are also key areas for collaboration, as India aims to become a global manufacturing hub and attract foreign investment.
Expand U.S. investments through targeted PLIs Attract U.S. companies in semiconductors, renewables, and electronics to deepen bilateral supply-chain interdependence. For the semiconductors, India is actively working to build its semiconductor manufacturing ecosystem, as evidenced by the recent focus on the sector and the potential for U.S. investment and technology transfer. Renewables in India have set aggressive renewable energy targets and are attracting significant international investment, making it an attractive market for U.S. companies in this sector. The goal of the supply-chain interdependence initiatives is to create deeper, more resilient supply chains between the two countries, reducing reliance on single sources and creating new opportunities for growth in high-tech industries

India now stands at a decisive juncture in its economic engagement with the United States. The tariff escalation, broad, steep, and sectorally uneven, has exposed the vulnerabilities of labour-intensive and high-value export segments while underscoring the limits of existing trade safeguards. Yet it also provides a moment for strategic recalibration. By pursuing targeted early-harvest arrangements, rebuilding cost competitiveness, accelerating market diversification, and deepening supply-chain integration with North America, India can both cushion immediate disruptions and reshape its long-term export trajectory. The coming phase of negotiations will be critical: India’s response must balance firmness with flexibility, ensuring that short-term shocks evolve into opportunities for structural strengthening rather than a prolonged economic rift.

The post India US Tariff War appeared first on BRIEF.

Krishangi Kathotia

briefindia — Fri, 28 Nov 2025 19:04:31 +0000

Research Assistant

Krishangi Kathotia is a research and policy professional working at the intersection of trade, geopolitics, foreign policy, and strategy. She brings experience in analysing complex regulatory landscapes, mapping global value chains and assessing geopolitical risks that shape India’s engagement with the global economy. She has previously worked with the American energy policy team at FiscalNote Professional Services and holds an M.A. in Diplomacy, Law, and Business from the Jindal School of International Affairs, India.

At BRIEF, she analyses the trade and logistics landscape through a geopolitical and geoeconomic lens.

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