India Aims for Full Tariff Relief in US Trade Talks
New Delhi is pushing for a full exemption from the additional 26 per cent tariffs on its exports, as it seeks to finalize an interim trade agreement with the United States before July 8. The talks, which have been ongoing between the two nations, are expected to conclude with a deal that could significantly ease the trade burden on Indian industries.
India’s government has expressed its desire to secure concessions for its labor-intensive sectors, including textiles, leather goods, and agriculture, in the proposed agreement. The US, on the other hand, has outlined its own list of sectors where it seeks tariff reductions, such as industrial goods, automobiles, and agricultural products.
The US imposed an additional 26 per cent tariff on Indian goods on April 2, but has temporarily suspended it for 90 days, with the deadline set for July 9. However, the 10 per cent baseline tariff remains in effect. This pause in tariffs provides a window of opportunity for both sides to negotiate further terms in the trade deal.
Commerce and Industry Minister Piyush Goyal recently visited Washington to strengthen the bilateral trade discussions. During his visit, he met with US Trade Representative Jamieson Greer and US Commerce Secretary Howard Lutnick. The minister-level meetings were followed by discussions between the chief negotiators of the two countries, which are set to continue until May 22.
India’s primary goal in these negotiations is to protect its sensitive industries, which are crucial for its economy. The government is seeking commitments from the US on duty concessions for sectors like textiles, gems and jewelry, leather goods, garments, plastics, chemicals, shrimp, oil seeds, grapes, and bananas. These sectors are vital for India’s export-oriented economy.
The US has also raised concerns about non-tariff barriers that Indian markets face for American goods. These barriers, which include regulatory and procedural issues, have been a point of contention in the negotiations. India has expressed openness to certain non-GM products, such as Alpha alpha hay, which is a type of cattle feed, but has not yet made progress on GM crops.
India’s trade with the US has been steadily growing, with the two nations being the largest trading partners for the fourth consecutive year in 2024-25. Bilateral trade stood at USD 131.84 billion during this period, with the US accounting for about 18 per cent of India’s total exports, 6.22 per cent in imports, and 10.73 per cent in the country’s total merchandise trade.
The US has expressed concerns over the widening trade deficit with India, which has been a key issue in the negotiations. India’s trade surplus with the US in goods for 2024-25 was USD 41.18 billion, a significant increase from previous years. This surplus has raised concerns in the US about the trade imbalance.
Both countries have set a target to more than double their bilateral trade to USD 500 billion by 2030. This goal is part of a broader strategy to strengthen economic ties and enhance cooperation between the two nations. The interim agreement is expected to play a crucial role in achieving this target.