As the trade deal negotiations with the US delegation begins in New Delhi on Wednesday, India is reportedly considering a significant reduction in tariffs on over half of US imports, valued at $23 billion.
This move would be the most substantial tariff cut in years and is aimed at averting retaliatory duties threatened to be imposed by the Trump administration from April 2.
The proposed US tariffs would impact 87% of India’s exports to the country, which amount to $66 billion.
As part of the deal under discussion, India is willing to lower tariffs on 55% of US goods currently subjected to duties ranging between 5% and 30%. New Delhi is said to be prepared to make considerable reductions and, in some cases, eliminate tariffs entirely on certain imports.
Data from the World Trade Organization shows that the US trade-weighted average tariff is around 2.2%, whereas India’s stands at 12%. The trade imbalance between the two nations remains substantial, with the US registering a $45.6 billion trade deficit with India.
During Prime Minister Narendra Modi’s February visit to the US, both sides agreed to initiate discussions on securing an early trade deal and addressing tariff-related disputes. New Delhi is eager to finalise an agreement before the reciprocal tariffs take effect. Assistant US Trade Representative for South and Central Asia, Brendan Lynch, is the leader of the US negotiating team.
The Indian side wants that any tariff reduction should depend on obtaining relief from the proposed reciprocal tax. While broader tariff reforms aimed at reducing trade barriers uniformly are under consideration, Indian officials indicate that these measures are in preliminary stages.
Although Modi was among the first leaders to congratulate Trump on his election victory, the US president has consistently criticised India’s trade policies, referring to the country as a habitual tariff imposer. Trump has reiterated his intention to impose duties without exceptions.
New Delhi has projected that tariffs on key export items, including pearls, mineral fuels, machinery, boilers, and electrical equipment, could rise by 6% to 10% due to the reciprocal tax. These products constitute half of India’s exports to the US.
Pharmaceutical and automotive exports, valued at $11 billion, are expected to face the most severe disruptions due to their heavy reliance on the US market. The tariff hikes might benefit alternative suppliers such as Indonesia, Israel, and Vietnam.
To secure domestic political support, India has defined clear boundaries for the negotiations. Tariffs on meat, maize, wheat, and dairy products—currently between 30% and 60%—are considered non-negotiable. However, duties on almonds, pistachios, oatmeal, and quinoa could be eased. New Delhi intends to advocate for a phased reduction in automobile tariffs, which currently exceed 100%.
India’s delicate balancing act in these talks was underscored by recent statements from its trade secretary during a parliamentary committee meeting and comments from US Commerce Secretary Howard Lutnick. The trade secretary conveyed to lawmakers that while India values its economic ties with the US, it remains committed to protecting its national interests.
Lutnick, meanwhile, urged India to take a more expansive approach following tariff cuts on high-end motorcycles and Bourbon whiskey earlier this year.
Will pressure from Washington push India toward broader cuts?
Analysts remain sceptical about whether India will undertake sweeping tariff reductions to meet US demands.
