Despite months of negotiations, no concrete agreement has emerged between India and the United States to reduce tariffs, prompting the Indian government to prepare an alternative strategy. Observers say that India has already begun implementing measures to counter potential risks arising from the high US duties.
The government is pursuing two primary objectives simultaneously. First, it seeks to reach a trade deal with the United States that preserves present commercial arrangements. Second, it is introducing reforms and policy measures aimed at minimising potential damage or exposure if tariffs remain in place.
These steps, they argue, are intended to start yielding visible effects while providing additional support to the economy in case a formal agreement is eventually reached.
The policy moves are also sending a strong signal to international investors. The analysts highlight that the government’s actions increase India’s market attractiveness, applying indirect pressure on the US administration.
Policymakers in the United States have previously suggested that India might face pressure from American business and investment interests, and India’s strategy reflects an effort to counteract this while strengthening its own position.
Reforms introduced during this period include measures to open the nuclear sector to private companies and allowing 100% foreign ownership in insurance firms. In addition, proposals to consolidate India’s securities market laws aim to modernise regulatory structures and encourage broader participation.
Such steps, according to the experts, could potentially unlock hundreds of billions of dollars in investment and support India’s long-term goal of emerging as a developed economy over the next two decades. For instance, reports indicate that major corporations are planning to invest in commercial nuclear projects in northern Indian states by taking advantage of these reforms.
Over the past four months, the government has accelerated policy actions after a slow start to the year. These include tax reductions, reforms in long-awaited labor laws and intensified trade talks with multiple countries. To mitigate the impact of the 50% tariffs imposed by the United States, India has pursued negotiations with partners, including the European Union, and recently signed a free trade agreement with Oman, the second such pact following the United Kingdom this year.
These policy decisions have come at a time when India has been handling complex foreign policy challenges, including military tensions with Pakistan and ongoing trade negotiations with the United States.
Economists have indicated that the recent steps signal diversification in policy, structural reforms and efforts to attract long-term capital, estimating India’s economic growth at 6.9% for 2026. Growth projections for the ongoing fiscal year have also been revised upward, with expectations of a moderate 6.5% expansion in the following year, though still below the 8% growth rate considered necessary for achieving developed nation status by 2047.
The need for a backup strategy arises from the direct impact of high tariffs on India’s exports, particularly to its largest overseas market, the United States. Despite ongoing discussions, clarity on a tariff-reduction deal is absent. The Indian rupee has weakened noticeably, falling more than 5% against the US dollar this year and becoming one of the region’s weakest currencies.
Important export-oriented states, including Tamil Nadu, a major hub for textiles, footwear and electronics, have warned that sustained high tariffs are harming local businesses.
