India Shares Sink on US Tariffs Criticism, Xi Urges Trade 'Tango'

Indian stocks sank on Tuesday amid concern over US tariffs due to be announced in Washington overnight and criticism of its trade barriers and burdensome import-quality requirements.

Market benchmarks logged their biggest one-drop fall in a month, with the BSE Sensex falling 1.8% and NSE Nifty 50 down 1.5% – the biggest fall since February 28.

US and Indian officials have made progress toward a bilateral trade agreement after several days of talks in New Delhi late last week, according to Reuters, which said India was open to cutting tariffs on more than half of US imports worth $23 billion.

Meanwhile, Chinese President Xi Jinping urged India to work together more closely, telling his Indian counterpart Droupadi Murmu their relationship should take the form of a “dragon-elephant tango” – a dance between their animal emblems. The message came on the 75th anniversary of diplomatic ties on Tuesday.

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China has been reaching out to Asian neighbours who are also US allies, offering greater trade opportunities, as it frets over the latest round of tariffs by US President Donald Trump.

Tensions between the two Asian giants are easing after a clash in 2020 between each country’s troops on the shared border in the Himalayas.

But Xi said in his note that they should find ways to coexist peacefully and that he’s ready to deepen communication and coordination in major international affairs, and jointly safeguard peace in border areas, according to The Times of India.

“Global trade remains volatile with [the] US tariff war reshaping economic dynamics,” Manish Goel, founder and managing director of Equentis Wealth Advisory. However, the overall outcome may not be as challenging as feared, Goel said.

But on Tuesday stocks of IT companies, which get a significant share of their revenue from the US, lost 2.5%. They have already sunk 15% this year but remain susceptible to the potential of lower spending by clients in case of a tariffs-led US slowdown.

“While IT has seen a dip in valuations, the impact on earnings remains highly uncertain due to the forecast of possible US recession,” said Vineet Agrawal, co-founder of Jiraaf, told Reuters.

Financials lost 2.2%. Goldman Sachs and HSBC flagged a slowdown in the sector due to sluggish loan growth.

The broader small-caps and mid-caps lost 0.7% and 0.9%, respectively.

But Vodafone Idea jumped 19.1% on the government’s plan to raise its stake in the telecom company by converting some spectrum dues into equity, giving it a lifeline amid its struggles with a debt load and better-funded rivals.

Talks focus on cutting tariffs, non-tariff barriers

Meanwhile, Delhi has sought to alleviate US concerns over trade despite Trump calling India a “tariff king”. Officials from the two countries discussed a reduction of tariffs and an easing of non-tariff barriers.

The talks, led by officials from India’s commerce ministry and a US trade delegation headed by Brendan Lynch, assistant US trade representative for South and Central Asia, were held from March 26-29.

Separately, US Deputy Secretary of State Christopher Landau spoke with Indian Foreign Secretary Vikram Misri about efforts to reduce trade barriers and achieve a “fair and balanced bilateral trade relationship”, while also strengthening defence and technology cooperation to bolster regional security.

Landau thanked India for its efforts in addressing illegal immigration to the United States and urged continued cooperation, the US Department of State said in a statement.

“The successful conclusion of the discussions reflects progress in efforts to expand India-US bilateral trade and investment relations to promote prosperity, security and innovation in both countries,” a statement by India’s commerce ministry said.

Last month, Prime Minister Narendra Modi’s visited Washington and vowed to boost purchases of US energy products and defence equipment, and the two sides agreed to aim for a deal targeting bilateral trade of $500 billion by 2030.

The wants India to reduce levies on products ranging from agricultural goods and alcoholic beverages to automobiles, and is seeking greater market access for US companies.

Piyush Goyal, India’s trade minister, visited Washington earlier this month for talks with US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick.

Sector-specific expert engagements for the bilateral trade agreement will begin virtually in the coming weeks, followed by an in-person negotiating round, the joint statement said.

The US currently has a $45.6 billion trade deficit with India. While the US trade-weighted average tariff rate stands at about 2.2%, India’s average tariff is significantly higher at 12%, according to World Trade Organization data.