New Delhi: China's proposal to cut tariffs on American goods to 10% from 125% for 90 days, and a reciprocal US proposal to reduce levies on Chinese goods to 30% from 145% offer both challenges and opportunities for India, exporters said.

The tariff reduction is likely to support growth in US-China bilateral trade in high-value segments such as electronics, machinery and chemicals.

The measures are part of the US-China trade deal announced Monday and represent a significant thaw in trade tensions between the two large economies. The deal has come amid India and the US negotiating a Bilateral Trade Agreement (BTA) with the two sides expected to conclude an interim arrangement by July 8, ahead of the additional 26% reciprocal tariff on Indian goods entering the US coming into effect.

The issue could be discussed during Indian trade negotiators' visit to Washington next week for holding further talks on the BTA as the tariff advantage to Indian exporters, because of the earlier higher duties on Chinese goods, could get hit.

The US-China deal is likely to intensify competition for Indian exporters in markets like Southeast Asia, Africa, and Latin America where New Delhi recently made inroads, capitalising on US-China trade disruptions, the Federation of Indian Export Organisations said.

"India can leverage this shift to strengthen exports in sectors that remain relatively insulated from US-China trade, such as pharmaceutical APIs, gems and jewellery, engineering goods, organic chemicals and IT-enabled services," said SC Ralhan, president, FIEO.

However, key sectors like steel, aluminium, and automobiles are excluded, with 25% tariffs still in place for all US partners.

Exporters said India must proactively engage with the US to secure and expand its preferential trade access, emphasising its role as a reliable alternate sourcing destination.