The government is considering reducing tariffs on more than half of US imports, valued at $23 billion, as part of an ongoing trade negotiation between the two countries, Reuters reported, citing two government sources.
This potential reduction would mark one of the largest tariff cuts in years, aimed at avoiding reciprocal tariffs that could negatively impact exports.
India is looking to mitigate the impact of US President Donald Trump’s global reciprocal tariffs, which are set to be implemented on April 2. These new tariffs have caused disruptions in markets and raised concerns among various countries, including some US allies in the West.
According to an internal analysis by India, the new US tariffs could affect 87% of Indian exports to the US, valued at approximately $66 billion, two government officials told Reuters.
To avoid this impact, India is open to lowering tariffs on 55% of US imports that are currently taxed between 5% and 30%, according to sources. Some of these tariffs may be reduced significantly, while others could be entirely removed.
The proposal is still under discussion, and Indian officials have not yet made a final decision. Other options being considered include adjusting tariffs for specific sectors rather than applying a broad reduction or negotiating reductions for select products instead of lowering tariffs across various industries.
A US delegation, led by Brendan Lynch, Assistant US Trade Representative for South and Central Asia, is set to visit India for trade talks beginning Tuesday. The Indian government hopes to finalize a deal before the US reciprocal tariffs take effect.
During Prime Minister Narendra Modi’s visit to the US in February, both nations agreed to begin early trade talks to resolve tariff disputes. However, India’s willingness to lower tariffs hinges on whether the US will ease reciprocal tariffs, according to officials.
India is considering reducing tariffs on products such as almonds, pistachios, oatmeal, and quinoa. However, India has set clear limits on the negotiations and will not reduce tariffs on meat, maize, wheat, or dairy products.
Tariffs on automobiles, which currently exceed 100%, may be lowered gradually, rather than through an immediate reduction.
The government is concerned that US reciprocal tariffs will negatively impact key export sectors, including pharmaceuticals, automobiles, electrical equipment, and machinery.
If tariffs on Indian exports rise, US companies might turn to alternative suppliers such as Indonesia, Israel, and Vietnam, further harming Indian businesses.
Sunil Barthwal, India’s trade secretary, told a parliamentary committee on March 10 that while India seeks to maintain strong trade relations with the US, it will not compromise its national interests, according to two sources who attended the closed-door meeting.
Meanwhile, US Commerce Secretary Howard Lutnick has encouraged the Indian government to consider broader tariff reductions, especially after India lowered tariffs on high-end motorcycles and bourbon whiskey earlier this year.
