US Commerce Secretary Urges India to Open Markets Amid Rising Trade Tensions

2025-09-29

Trade relations between the United States and India are once again under the spotlight after US Commerce Secretary Howard Lutnick made pointed remarks urging India to open its markets and refrain from actions that Washington views as harmful.

His comments come at a time when tariffs, energy policies, and geopolitical pressures are straining one of the world’s most important bilateral economic relationships.

As India seeks to expand its global trade footprint, and the US insists on reciprocity, the path forward remains delicate. This article explores Lutnick’s demands, the roots of ongoing tensions, the impact of tariffs on Indian exporters, and what lies ahead for both nations in their pursuit of a balanced trade deal.

US Commerce Secretary’s Call for Market Liberalization

During a recent engagement, Lutnick emphasized that India along with Switzerland and Brazil must “react correctly” to the US by liberalizing its markets. His warning was straightforward: India must “play ball” if it wants continued access to American consumers.

This demand aligns with Washington’s longstanding stance that while India benefits significantly from the US market, it has been reluctant to offer equivalent openness.

Lutnick also reminded policymakers that the US negotiates trade deals with increasingly tougher terms over time, signaling that concessions may become more costly if India delays cooperation.

His remarks coincided with a visit to Washington by an Indian delegation led by Commerce and Industry Minister Piyush Goyal, where both sides agreed to accelerate talks on a favorable trade framework.

India–US Trade Tensions: Key Issues at Stake

Tariffs and Indian Export Challenges

One of the most contentious aspects of the relationship is tariffs. The US has imposed duties as high as 50% on Indian exports, hitting sectors such as textiles, seafood, chemicals, auto components, gems, and jewelry.

These measures make Indian goods less competitive compared to alternatives from countries like Vietnam, Bangladesh, or China.

For exporters particularly micro, small, and medium enterprises (MSMEs) that contribute around 45% of India’s total exports these tariffs translate into reduced volumes, tighter margins, and, in many cases, job losses.

Russian Oil and Strategic Energy Choices

Another sticking point is India’s purchase of Russian oil. Lutnick and other US officials argue that such imports undermine US-led sanctions and harm American interests. India, however, defends its stance as a matter of national interest, prioritizing affordable energy to fuel its rapidly growing economy.

This energy divergence has added complexity to trade negotiations, with Washington linking oil imports to broader economic cooperation.

US Push for Reciprocity

Underlying all these issues is the US expectation of reciprocity. Washington argues that while American markets remain relatively open to Indian goods and services, India continues to shield several sectors from agriculture to digital services behind regulatory barriers. The US wants a level playing field where American businesses can compete fairly.

The Economic Impact of Tariffs on India

MSMEs and Export Revenues

Tariffs directly erode the competitiveness of Indian exporters. For MSMEs, which often operate on thin margins, the additional costs are crippling. Reduced exports mean lower revenues, weaker investment capacity, and workforce reductions. This creates a ripple effect across supply chains, from manufacturers to logistics providers.

Sectoral Breakdown: Who Suffers Most?

Seafood: Shrimp exporters have lost ground to competitors in Vietnam and Ecuador, with US buyers shifting away due to price hikes.
Textiles: Apparel manufacturers face reduced orders as retailers in the US pivot to Bangladesh and Cambodia.
Pharmaceuticals: A potential 100% tariff threatens India’s $50 billion pharma industry, which supplies affordable generics to the US healthcare system.
Gems and Jewelry: Duties on polished diamonds and jewelry have hit India’s Surat-based industry, resulting in layoffs and declining export earnings.

The cumulative effect is not just economic but social, as millions of workers in export-oriented sectors face uncertainty.

Ongoing Trade Talks and Diplomatic Engagements

Despite the tensions, both nations remain engaged in negotiations. Piyush Goyal’s recent visit to Washington highlighted India’s willingness to find common ground, though officials stress that national interest cannot be compromised.

For Washington, tariffs and access remain non-negotiable priorities. For India, energy security and protecting sensitive industries are equally critical. The talks are therefore less about immediate breakthroughs and more about building a sustainable framework for long-term cooperation.

Both sides have agreed to maintain an open dialogue, recognizing that the stakes are high. The US views India as a strategic counterweight to China, while India values access to American consumers as it expands its export economy.

Future Outlook: Can India and the US Find Common Ground?

Looking ahead, much depends on political will and timing. Lutnick’s warning that US trade terms harden over time puts pressure on India to act swiftly. However, India’s domestic priorities from energy affordability to protecting MSMEs mean that concessions will not come easily.

Yet, there are opportunities for progress. India could consider targeted liberalization in non-sensitive sectors, while the US may offer phased tariff reductions to ease the burden on Indian exporters. Joint initiatives in technology, pharmaceuticals, and clean energy could also serve as confidence-building measures.

Ultimately, the relationship will hinge on whether both nations can strike a balance between protecting national interests and embracing global trade realities.

Conclusion

The remarks by US Commerce Secretary Howard Lutnick have reignited debates about the future of India–US trade relations. While tariffs, oil imports, and market access remain contentious, both nations recognize the strategic importance of cooperation.

The road to a comprehensive trade deal will likely be long and complex, but continued engagement signals a mutual acknowledgment that neither side can afford prolonged discord. In a rapidly shifting global economy, India and the US must find ways to align their interests if they hope to unlock the full potential of their economic partnership.

FAQ

What did the US Commerce Secretary say about India?

Howard Lutnick urged India to open its markets, reduce trade barriers, and stop policies Washington views as harmful to US interests.

Why are India–US trade relations tense right now?

Key tensions stem from US tariffs on Indian goods, India’s purchase of Russian oil, and differing views on market access.

How do US tariffs impact Indian exporters

Tariffs raise costs, reduce competitiveness, and threaten revenues across sectors like textiles, seafood, gems, and pharmaceuticals.

What was discussed during Piyush Goyal’s visit to the US?

Both sides agreed to continue trade talks, focusing on tariffs, investment opportunities, and the framework for a potential trade deal.

Can India and the US reach a trade agreement soon?

While a quick deal is unlikely, ongoing dialogue suggests both nations are committed to resolving tensions and expanding trade ties.

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