External Affairs Minister S Jaishankar opened up about the growing trade tensions between India and the United States, explaining that the root cause of the current 50% tariffs on Indian exports is the failure to find a “landing ground” or common agreement between the two countries. Speaking at the Kautilya Economic Conclave (KEC 2025), Jaishankar said that while talks are ongoing, India will not compromise on its key “red lines.”
The tariff dilemma
Jaishankar revealed that India is actively negotiating the hefty tariffs, which include a 50% tariff on Indian goods and a 25% tariff related to Russia crude oil purchases. However, he made it clear that any resolution must respect India’s fundamental concerns. Despite the tariffs, Jaishankar expressed hope that the tensions will not affect all aspects of trade, noting that a large part of the India-US relationship remains “business as usual.”
Jaishankar said the rules-based international order has been weakened or discarded in recent years, affecting how countries prioritize trade decisions. He pointed out that ownership, security, reliability, and resilience now weigh as heavily as cost in trade considerations.
Free Trade Agreements and supply chain challenges
The minister also addressed India’s existing Free Trade Agreements (FTAs) with Asian economies, noting the challenge posed by competitive economies within these agreements. Some FTAs have inadvertently opened pathways for China due to supply chain dynamics. Jaishankar stressed India’s focus should be on FTAs with non-competitive economies to better protect its interests.
Jaishankar acknowledged that India has “lost decades” in manufacturing and shed light on the urgent need to build capabilities in both advanced and traditional manufacturing sectors to find an optimal economic balance.
