India faces less urgency to conclude a trade agreement with the United States following the latest US midterm election outcome, which ended unified Republican control of Congress, according to a report by Emkay Global Financial Services.
The report suggests that the changing political landscape could reduce Washington’s ability to introduce sudden trade restrictions, giving India greater flexibility in future negotiations. It noted that the proposed 18% US tariff framework rate was not implemented and that Indian goods currently face a lower 10% duty under Section 301.
According to Emkay, the election results may not significantly alter the existing tariff structure but could change US President Donald Trump’s trade policy priorities, increasing pressure to address consumer affordability and pursue agreements ahead of the 2028 presidential election.
Any fresh tariff measures would likely require slower, investigation-based procedures under Sections 301 and 232, reducing the possibility of sudden trade disruptions. However, trade policy uncertainty is expected to continue.
Potential risks for India include sector-specific tariffs on pharmaceuticals and electronics, as well as geopolitical tensions involving Russia and Iran that could renew pressure on India’s oil imports.
The report also highlighted improving economic conditions, including a softer US dollar and easing crude oil prices, which could support the Indian rupee and export prospects.
Brent crude prices have declined around 19% from their October highs to approximately $95 per barrel. The moderation could provide relief to India, whose oil import bill has increased 24% during the financial year so far.
However, persistent inflation in the United States could keep interest rates elevated even if the Federal Reserve gradually adjusts monetary policy. This is likely to keep the Reserve Bank of India cautious about domestic inflation, currency stability and external economic risks.
