India inks trade deals to rival Vietnam for US market share

NEW DELHI — India has secured a series of landmark trade deals, including a free trade agreement (FTA) with the European Union and a new framework agreement with the United States.

According to regional media analysis, Washington has moved to slash tariffs on Indian goods to levels lower than those applied to exports from Vietnam and Malaysia. The move is seen as a pivotal component of broader strategic calculations between the two nations.

Jawed Ashraf, chairman of the India Trade Promotion Organization, said the agreements reflect New Delhi's "new confidence" in opening its domestic markets. Ashraf noted that while India is strengthening ties with the EU, it continues to maintain a "controlled opening" regarding trade with China.

Despite the new flurry of bilateral activity, India shows no signs of revisiting its decision to remain outside of the ASEAN-backed Regional Comprehensive Economic Partnership (RCEP).

The recent agreements are expected to drive a surge in foreign direct investment and solidify India’s key strategic partnerships.

Washington’s decision to lower tariffs on Indian goods to levels that undercut Vietnam’s competitiveness marks a significant headwind for Hanoi’s export-led growth model. This shift transcends simple trade policy; it is a calculated geopolitical maneuver by the United States to position India as a strategic economic counterweight to China and a premier, resilient manufacturing hub.

For the better part of a decade, Vietnam has been the primary beneficiary of the "China Plus One" strategy, capturing the lion’s share of supply chain relocation. However, this latest move signals that the U.S. is doubling down on India, leveraging its massive demographic dividend and market scale. The resulting tariff advantage threatens to pivot foreign direct investment (FDI) flows, forcing multinational corporations to reassess the viability of Vietnamese production lines against an Indian alternative that now offers superior access to the American market.

India’s trade strategy has proven particularly astute. By aggressively pursuing bilateral Free Trade Agreements (FTAs) with the U.S. and the European Union while maintaining its distance from the China-influenced Regional Comprehensive Economic Partnership (RCEP), New Delhi has successfully negotiated preferential terms without being tethered to a Beijing-centric trade bloc.

For Vietnam, the rise of a U.S.-backed India as a direct competitor creates a high-stakes environment. To preserve its status as a critical node in the global supply chain, Hanoi must now accelerate structural reforms and enhance its value proposition to counter the mounting pressure from its South Asian rival.

A potential US-India trade agreement could create significant headwinds for Vietnamese-American entrepreneurs, particularly those anchored in the import-export and supply chain sectors. For many business owners—from large-scale distributors to those supplying the local Little Saigon economy—goods manufactured in Vietnam may lose their competitive pricing advantage against Indian imports. This shift could squeeze profit margins, forcing businesses to aggressively optimize their costs or diversify their sourcing strategies to maintain their foothold in the American market.