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Indian Prime Minister Narendra Modi is preparing to introduce additional tariff reductions in an effort to boost American exports and prevent a potential trade conflict with the United States. This move comes just ahead of his highly anticipated meeting with U.S. President Donald Trump, according to government insiders.
Modi’s visit to the U.S., scheduled for Wednesday and Thursday, coincides with Trump’s plans to impose new reciprocal tariffs on multiple countries. The U.S. president has been vocal about reshaping global trade policies to favor American interests. While he hasn't explicitly named which countries would face these tariffs, he has previously accused India of being a “very big abuser” in trade and urged New Delhi to increase its purchases of American security equipment to ensure a more balanced trade relationship.
India Weighing Tariff Cuts in Key Sectors
To address trade concerns and improve bilateral ties, India is considering reducing tariffs in at least a dozen key sectors. These include electronics, medical and surgical equipment, and various chemicals—all areas where the U.S. has strong export potential.
Three government officials, speaking anonymously, revealed that tariff concessions are being examined for goods that India already imports from the U.S. or could potentially buy in larger quantities. Some of the specific products under review include dish antennas and wood pulp. These cuts are expected to align with India’s broader economic and manufacturing goals.
Modi is likely to discuss these tariff reductions with Trump during their meeting, with New Delhi open to negotiating a potential "mini" trade deal.
Avoiding a U.S.-China Style Trade War
One senior official highlighted the urgency of the move, stating that India hopes to steer clear of a trade conflict similar to the ongoing U.S.-China dispute. Trump had previously slapped 10% tariffs on a range of Chinese imports, prompting Beijing to retaliate with its own duties on American energy exports.
The Indian officials, who are not authorized to speak to the media, noted that New Delhi is keen on ensuring that its trade relations with Washington remain stable and beneficial. However, when approached for comment, India’s trade and foreign affairs ministries, along with the Prime Minister’s Office, did not respond to requests made outside regular working hours.
Recent Tariff Reductions and Trade Reforms
India has already taken steps to lower import tariffs, reducing average rates from 13% to 11% in its recent national budget. Additionally, duties on high-end motorcycles and luxury cars have been cut, signaling a broader effort to make imports more accessible.
Beyond tariff reductions, the government is also reviewing surcharges on more than 30 items, including solar cells and luxury vehicles, in an effort to streamline trade policies and enhance economic ties with the U.S.
Modi-Trump Meeting to Focus on Trade and Security
While trade is expected to be a key discussion point in Modi’s meeting with Trump, the talks will also cover defense cooperation and technological partnerships. However, the meeting has been somewhat overshadowed by recent developments, including the deportation of Indian nationals from the U.S., which has caused diplomatic concern in New Delhi.
One senior official emphasized that while the upcoming meeting will provide a political framework for stronger U.S.-India relations, more detailed trade discussions will follow after the visit.
India-U.S. Trade Relationship on the Rise
Despite Trump’s criticism of India’s trade practices, he has publicly praised Modi, calling him “fantastic.” This underscores the complex but growing economic partnership between the two nations.
The U.S. remains India’s largest trading partner, with bilateral trade surpassing $118 billion in the 2023-24 fiscal year. India maintained a trade surplus of $32 billion, reflecting its strong export performance in multiple sectors.
Over the past decade, trade between the two countries has steadily expanded. Washington increasingly views New Delhi as a crucial economic and strategic ally, particularly as a counterbalance to China’s growing influence in the Indo-Pacific region.
As Modi and Trump prepare to meet, the stakes are high. A successful discussion on trade could not only prevent potential tariff disputes but also pave the way for a stronger, more balanced partnership between the two economic giants.
