New Delhi: In a bid to avert potential reciprocal tariffs from the United States, India is contemplating significant tariff reductions on over half of its $23 billion worth of U.S. imports. This move comes as Assistant U.S. Trade Representative Brendan Lynch arrives in New Delhi for crucial trade talks, just days before the April 2 deadline for the implementation of U.S. reciprocal tariffs.
The proposed tariff cuts, potentially the most substantial in years, are part of India’s strategy to negotiate a bilateral trade agreement (BTA) with the United States. Indian officials are set to meet with the U.S. delegation from March 25-29 to discuss the framework, schedule, and terms of reference for the proposed BTA.
India’s Commerce Ministry has expressed its commitment to expanding and deepening bilateral trade and economic ties with the U.S. in a mutually beneficial manner. The negotiations are expected to focus on resolving long-standing trade challenges and advancing the shared objective of doubling bilateral trade to $500 billion by 2030.
However, the Indian government remains cautious about overexposing sensitive sectors to foreign competition. The evolving approach appears to be one of calibrated liberalization, balancing tariff reductions with domestic industry safeguards and export incentives.
As part of its efforts to address U.S. concerns, India has already lowered import taxes on several goods, including bourbon whiskey and high-end motorcycles. The government is also considering further reductions on a range of other products, such as automobiles, agricultural goods, and chemicals.
President Donald Trump’s plan to impose reciprocal tariffs on April 2 has raised concerns about its potential impact on Indian exports. Key sectors that could be affected include agriculture, meat and processed food, automobiles, diamonds, gold products, chemicals, and pharmaceuticals, where tariff differentials range between 8 and 33 percent.
Indian officials hope to discuss the possibility of a temporary waiver from these reciprocal tariffs during the upcoming talks. The impact of such tariffs on India remains uncertain, as the U.S. investigation to determine the rates is still ongoing.
The upcoming discussions are expected to focus on forming a framework for the bilateral trade agreement, after which formal negotiations would commence. The agreement is likely to be finalized in two tranches, with the first phase expected to concentrate on issues pertaining to goods trade.
Both countries are targeting to conclude the first phase of the agreement by fall 2025. The negotiations are expected to cover a wide range of issues, including market access, tariff and non-tariff barriers, and supply chain integration.
As the negotiations progress, it remains to be seen how India and the United States will balance their respective interests and work towards a mutually beneficial trade agreement that addresses long-standing concerns while promoting economic growth and cooperation between the two nations.
