Priyanka Tiwari
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India is considering slashing tariffs on more than half of the U.S. goods it imports—valued at over $23 billion—as part of a proposed trade agreement with Washington. This would mark one of India’s largest tariff reductions in recent years, aimed at shielding Indian exporters from upcoming reciprocal tariffs planned by U.S. President Donald Trump, effective April 2.
Impact of Reciprocal Tariffs on Indian Exports
According to an internal Indian government analysis, the proposed U.S. reciprocal tariffs would affect nearly 87% of India’s exports to the U.S., which totaled $66 billion. These measures could hit key sectors including pharmaceuticals, automotive, electrical equipment, machinery, and mineral fuels. The potential fallout has prompted India to expedite negotiations for an early trade pact.
Tariff Concessions on the Table
India is reportedly ready to reduce or eliminate tariffs on 55% of its U.S. imports, which currently face duties ranging between 5% and 30%. This is conditional on the U.S. offering relief from the proposed retaliatory tariffs.
India’s trade ministry and Prime Minister’s Office have not commented officially on the talks. However, sources confirm the government is also exploring alternatives like sector-specific tariff adjustments or a phased, product-by-product approach instead of sweeping reductions.
U.S.-India Trade Talks and Future Strategy
During Prime Minister Narendra Modi’s February visit to the U.S., both nations agreed to accelerate talks to resolve their trade differences. U.S. Assistant Trade Representative Brendan Lynch is scheduled to lead a delegation to New Delhi for negotiations.
India is also evaluating long-term tariff reform for broader liberalization, but such plans remain in preliminary stages and may not be included in the immediate deal.
Sensitive Sectors Off Limits for Tariff Cuts
To gain political consensus domestically, India has outlined red lines. High tariffs (30–60%) on sensitive items such as meat, maize, wheat, and dairy will remain unchanged. However, concessions may be extended on items like almonds, pistachios, quinoa, and oatmeal. Additionally, phased tariff reductions on imported automobiles—currently taxed at over 100%—may be considered.
Concerns Over Trump's Trade Policies
Despite diplomatic gestures, President Trump has continued to label India a “tariff king” and reiterated plans to apply uniform tariffs globally. India estimates an increase of 6–10% on major export items under this policy.
The pharma and auto sectors, together contributing $11 billion in exports, are especially vulnerable. Officials warn that countries like Vietnam, Indonesia, and Israel may gain an edge if U.S.-bound Indian exports lose competitiveness due to new duties.
Balancing National Interests with Trade Flexibility
India’s Trade Secretary Sunil Barthwal recently told a parliamentary committee that while maintaining U.S. trade relations is essential, India will not compromise on its core national interests.
Milan Vaishnav, a political economist at Carnegie Endowment for International Peace, noted, “While Modi may use U.S. pressure as leverage for reforms, sweeping tariff cuts still remain unlikely.”
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