Indian shares edged lower on Wednesday amid renewed concerns over trade tension between the United States and India, with Tata Motors and Tata Consultancy Services dragging the index lower.

The benchmark BSE index was down 0.14 per cent at 38,677.56 at 0515 GMT, while the broader NSE index was 0.15pc lower at 11,537.85.

“The US-India development has spooked markets,” said Deven Choksey, founder, KR Choksey Investment Managers.

Ahead of the Indo-US trade talks on Friday, US President Donald Trump once again warned the Asian country that its high tariffs were not acceptable. In May, India imposed higher tariffs on 28 US products, including almonds and apples.

The markets witnessed a sharp selloff in the last two sessions as investors were worried about a surcharge on foreign portfolio investors.

“The finance minister will clarify about the surcharge and may find resolving the issue challenging as the government can't have different tax policy for domestic and global investors,” Choksey said.

However, the Economic Times said an analysis by the finance ministry showed that 60pc of foreign portfolio investors (FPIs) who use the corporate structure will not be impacted by the surcharge and only those that follow the trust structure will be affected.

Investors in broader Asia took a cautious stance as they weighed whether US Federal Reserve Chairman Jerome Powell would confirm or confound expectations for US policy easing this month. Powell will testify before the Congress on Wednesday and Thursday.

Shares of Tata Motors Ltd were top losers on the NSE index, with a 3.5pc fall, hitting their lowest since February 11.

Shares of Tata Consultancy Services were down as much as 2.91pc, their lowest in over six weeks, after the IT services company reported lower quarterly margins on Tuesday.

Interglobe Aviation Ltd shares fell as much as 19pc after one of the co-founders of India's largest airline, IndiGo, alleged violation of corporate governance rules at the parent group.