India-US trade deal: Modi government eyes tariff cuts on more than half of US imports worth $23 billion, says report
India is willing to reduce tariffs on over 50% of American imports valued at $23 billion during the initial stage of a trade agreement under negotiation between the two countries, two government officials told Reuters. This significant reduction aims to prevent retaliatory reciprocal tariffs.
WTO data indicates the U.S. trade-weighted average tariff stands at 2.2%, whilst India’s is 12%. The United States maintains a $45.6 billion trade deficit with India.
India aims to minimise the effects of reciprocal worldwide tariffs planned by the US President Donald Trump from April 2, which has caused market uncertainty and concerned policymakers globally.
According to an internal assessment, two government officials informed Reuters that such reciprocal tariffs would affect 87% of India’s exports to the United States, worth $66 billion. Both sources said that India is prepared to lower tariffs on 55% of American imports currently subject to 5%-30% duties.
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For this category, India is prepared to significantly reduce or eliminate tariffs on imported American goods valued above $23 billion, one source revealed.
During Prime Minister Narendra Modi’s visit to the United States in February, both countries consented to initiate discussions aimed at achieving a swift trade agreement and addressing their tariff dispute.
The Indian administration seeks to finalise an agreement before the announcement of reciprocal tariffs. Brendan Lynch, Assistant U.S. Trade Representative for South and Central Asia, will head a delegation of American officials for trade negotiations starting Tuesday.
Government officials from India cautioned that reducing tariffs on more than 50 percent of American imports is contingent upon obtaining relief from reciprocal taxation. The officials indicated that the decision to cut tariffs remains under consideration, with alternative approaches being explored, including sector-specific tariff adjustments and item-by-item negotiations instead of a broad reduction.
India is also exploring comprehensive tariff reforms to reduce trade barriers across the board. However, these discussions are preliminary and may not be immediately addressed during the talks with the United States, according to one official.
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Trump has persisted in labelling India as a “tariff abuser” and “tariff king”, declaring his intention to impose tariffs universally.
According to two sources, India anticipated 6% to 10% increases in duties on various items including pearls, mineral fuels, machinery, boilers and electrical equipment, which constitute 50% of its US exports, as a consequence of reciprocal taxation.
A second official indicated that pharmaceutical and automotive exports, valued at $11 billion, could face significant disruption from reciprocal tariffs, given their US market reliance. The official noted that Indonesia, Israel and Vietnam could emerge as alternative beneficiaries.
A third government representative confirmed that existing tariffs on meat, maize, wheat and dairy products, currently ranging from 30% to 60%, remain non-negotiable. However, duties on almonds, pistachio, oatmeal and quinoa might be reduced.
According to a fourth official, India will advocate for gradual reductions in automobile tariffs, which presently exceed 100%.
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