Priyanka Tiwari
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India is trailblazing towards the deadline of April 2 when the adverse tariffs laid out by US President Donald Trump are expected to pollute the economy. Trump had previously called out India as a “tariff abuser,” but Americans appeared to soften their stance when India’s Commerce Minister met them – Trump stated India was willing to cut tariffs, although an Indian official has claimed no decision has yet been made.
Trade Minister Piyush Goyal has been in America for the last week of February meeting various officials in preparation for what promises to be tough negotiations around the so-called bilateral trade agreement which both sides have targeted for September-October 2025.
The deadline less than a month out, India does not seem to have enough time to sketch a rough outline of the trade agreement (over 13,000 line items, 400 of which are IT) which will put the policymakers and industries in confusion due to the damage the negative tariffs might inflict.
"The most probable area where India could plausibly reduce tariffs relates to the auto sector, which impacts automobiles costing upwards of Rs 50 lakh - the luxury premium segment and it would score for Trump," claimed a source who was in close contact with the negotiators last week.
Contrarily, India’s risk for increasing United States tourism is that it would violate WTO agreements. It could also worsen relations with Europe. In this case, the EU would receive equal lower tariffs by India, but India would have to incur the wrath of the World Trade Organization.
India has long been known to have disputes with the EU, Taiwan, and Japan over IT product tariffs. These disputes lead to the case where a WTO panel ruled out other nations’ tariffs after deeming that India’s mobile phone tariffs were not in line with WTO commitments. In other disputes, India was rather accused of "potentially distorting" the global market with wheat and rice during the time India broke the subsidy limit under the WTO's' peace clause.“ India challenged Europe on airports, wherein India and the EU nearly ceased all economic activity from and to India.
While meeting Trump towards the end of December, PM Modi was referred to as a ‘Tariff Abuser’ which Is a calling card India would not particularly want. While this highlighted a cold India-US relationship, it displayed fundamentally free trade approach from the US looking to implement the tariff structure towards India.
"I consider the exception clause of the rule and the relationship with India comes to my mind as an exception. There are great strategic benefits to the United States in having India as a partner. India is strategically very important and so the Trump administration appears to have some inclination towards granting India special consideration," stated Lawrence.
As of 2024, the approximated total merchandise trade between India and the United States stood near $129 billion, with America spending $41.8 billion dollars on Indian goods while India receiving $87.4 billion dollars. In 2024, the US had a trade deficit of $45.7 million with India.
There are major Indian exporters in the technology and IT sector. The software services exports from India increased from $200 billion in 2022 to $205.2 billion during the years of 2023 and 2024.
The United States remains the largest exporter of software and electronics to India with a share of 54%. Meanwhile India on the other hand, has higher import tariff on electronic goods than on China and Vietnam and other economies.
As stated in the report by India Cellular and Electronics Association (ICEA), high tariffs are offsetting the positive effect of the PLI scheme. It examined over 120 tariff lines of certain priority products in electronics from India, China, Vietnam, Thailand, and Mexico. To boost Indian manufacturing, the government implemented the PLI scheme. Electronics exports have been one of PLI’s success stories, highlighted by mobile phone exports reaching an all-time high of 1.5 lakh crore rupees in January 2025.
The industry was of the view that to make the country more competitive, the tariffs on electronic imports should be lowered. While the tariffs may be detrimental to the trade relations for a number of nations, the impact on India may be quite different.
