US promises India tariff advantage over rivals: What it means for exporters; can they outpace Vietnam and China?

IndiaIndia could secure a tariff advantage over competing economies in the US market under the proposed bilateral trade agreement with Washington, potentially giving Indian exporters a stronger footing against rivals such as Vietnam, Bangladesh and China.

The United States has assured India of a comparative tariff advantage over its competitors under the proposed trade pact, news agency ANI reported, quoting a senior government official.

However, the actual extent of this advantage will depend on the final tariff structure and the outcome of ongoing trade investigations.

"The US has assured India of a comparative tariff advantage over its competitors in the trade deal. We will have to see how the tariff framework unfolds," the official said, as per ANI.

The assurance comes as New Delhi and Washington continue negotiations on the first tranche of their bilateral trade agreement (BTA), alongside discussions on the broader pact. India is aiming to conclude the initial tranche by the end of the current financial year.

Can India gain an edge over Vietnam and Bangladesh?

A more favourable tariff arrangement could improve the competitiveness of Indian products in the US, particularly in sectors where exporters compete directly with manufacturers from Vietnam, Bangladesh and other Asian economies.

The tariff differential could become an important factor in determining sourcing decisions by American buyers.

If Indian goods face lower import duties than comparable products from competing countries, exporters could gain an advantage in pricing, attract fresh orders and potentially expand their market share.

Vietnam and Bangladesh are among the economies competing with India for a larger share of the American market. Vietnam currently faces a reported 12.5% general duty on its exports to the US under Section 301, while Bangladesh faces a 10% duty.

What is the status of the India-US trade deal?

India and the US have been negotiating the bilateral trade agreement since its announcement in February 2026.

Both sides are pursuing discussions on the initial tranche and the broader agreement simultaneously, with the first phase expected to deliver early outcomes.

Services-related issues will not be included in the first tranche and will instead be taken up during the second phase of negotiations as part of the larger agreement.

The final pact is expected to be structured as a legal text accompanied by annexures, with a dedicated chapter on customs and trade facilitation, the government official said.

As part of the negotiations, a two-member US delegation visited India on November 2 and 3 to discuss customs procedures and trade facilitation. The discussions followed engagements between the two countries on reducing procedural barriers and improving the movement of goods across borders.

Commerce and Industry Minister Piyush Goyal has also expressed confidence in the negotiations, saying India would secure one of the best trade agreements with the US.

"And in every respect, India will have one of the best deals with the US," Goyal told reporters on Thursday.

He said India had negotiated a strong set of outcomes with Washington under the proposed agreement.

Why does the US tariff investigation matter?

Despite the positive signals, uncertainty remains over the final tariff framework.

The US imposed an additional 10% import duty on several countries, including India, effective July 24, 2026. The additional levy followed a US investigation into forced labour-related issues under Section 301 of the US Trade Act of 1974 and applies over and above existing Most Favoured Nation (MFN) tariff rates.

Section 301 empowers the Office of the United States Trade Representative (USTR) to investigate and take retaliatory action against foreign government policies and practices considered discriminatory or harmful to US commerce, including those that violate trade agreements.

India is awaiting the outcome of a second investigation initiated by the USTR against the country. Its findings could have implications for the final tariff arrangements and the extent of the advantage New Delhi secures under the trade pact.

What it means for Indian exporters

A favourable tariff differential could strengthen India's position as American companies look to diversify their sourcing and reduce dependence on particular manufacturing hubs.

Indian exporters in sectors competing with suppliers from Vietnam and Bangladesh could potentially benefit from improved price competitiveness. A lower tariff burden could also make India a more attractive destination for sourcing and encourage businesses to expand production and supply-chain investments.

However, a tariff advantage alone may not be enough to help Indian exporters overtake established competitors.

Manufacturing costs, production capacity, delivery timelines, infrastructure, product quality and the ability to meet large-volume orders will remain crucial.

The broader question, therefore, is whether India can convert a potentially favourable trade arrangement into sustained export growth.

Much will depend on the final agreement, the sectors covered and how effectively Indian manufacturers use the opportunity to gain a larger foothold in the US market.

About the Author

Bhanu Pratap is a journalist who reports and writes on foreign affairs, India’s foreign policy, geopolitics and strategic affairs. He closely follows diplomatic developments in New Delhi and has a keen interest in defence and national security.<br> <br> Bhanu also focuses on in-depth, interview-based reports and regularly speaking with experts and policymakers to bring perspectives and context to major developments around the world.<br> <br> He is also interested in stories with strong humanitarian angles.<br><br> One such report examined the cases of Indian nationals who were allegedly recruited and forced into Russia’s war against Ukraine. While reporting the story, Bhanu spoke to the families of those affected and documented their experiences. The report was later taken into account by the United Nations in its findings on human rights violations linked to the war in Ukraine.<br> <br> For Bhanu, the zeal to produce meaningful and impactful journalism remains at the heart of his work.<br> <br>He has previously worked with Firstpost, NDTV, Newslaundry and Republic.<br><br> Bhanu studied at the Delhi School of Journalism, University of Delhi. He initially chose science with plans to pursue engineering, influenced by conventional expectations, but fate had other plans and eventually led him to journalism.<br><br> Beyond the newsroom, Bhanu enjoys exploring culture and history and often spends his days off on heritage walks. He is also passionate about travelling, biking and listening to folk music.<br> <br>For tips, reviews and suggestions, you can reach him at bhanu.pratap@htdigital.in.