India Aims to Remove US Tariffs on Labour-Intensive Exports Amid Early Trade Deal Talks
India is working to reverse the impact of recent US tariffs on its exports, particularly in sectors that are labor-intensive, as part of ongoing negotiations with the United States under an early trade agreement. The country is seeking reductions in import duties for goods such as textiles, leather goods, and agricultural products, in exchange for concessions on American imports, including farm goods and other products.
India’s foreign ministry has indicated that discussions with the US are progressing positively, with the goal of finalizing an interim agreement before July 8. This would include provisions on goods, non-tariff barriers, and services such fittings and digital sectors. Officials have emphasized that the current 26% additional duty and 10% baseline tariff should be removed for Indian exports to restore competitiveness.
The 90-day suspension of reciprocal tariffs has been in place, but the 10% baseline duty remains, which has been a key issue for Indian exporters. A comprehensive trade deal covering 85-90% of products from both nations, known as ‘substantial coverage,’ is unlikely until the Trump administration secures Congressional approval for reducing tariffs below the most-favored nation rates.
India’s Commerce and Industry Minister, Piyush Goyal, and a team of Indian negotiators are currently in the US engaging in detailed discussions on the bilateral trade agreement, which was agreed upon in the fall by President Trump and Prime Minister Narendra Modi. The government had initially sought an ‘early tranche’ before the 90-day pause on reciprocal tariffs expires, but officials have said the talks are moving forward smoothly.
Goyal recently shared on social media that discussions with the US Commerce Secretary, Howard Lutnick, were productive, and he expressed hope for expediting the first tranche of the India-US trade agreement. The focus of the negotiations is on achieving a balance that allows India to reduce tariffs on its labor-intensive exports while securing concessions on American goods, particularly in the automotive and agricultural sectors.
India is seeking duty concessions for labor-intensive sectors such as textiles, leather goods, gems and jewelry, plastics, chemicals, shrimps, oil seeds, and some Indian fruits. In return, the US is seeking duty cuts on its automobiles, especially electric vehicles like Tesla, whiskey, wine, petrochemicals, dairy, and farm goods, including genetically modified crops.
While India is open to lowering customs duties on farm products, it has made it clear that it will not allow genetically modified products to enter the country. The US-UK trade deal is seen as a model, where Washington offered concessions on around 100 products while securing duty reductions for approximately 2,500 American goods, as well as commitments for more aircraft and other purchases.
Experts have argued that India may need to make more concessions than it can secure, including increased purchases of liquefied natural gas (LNG), fertilizers, and defense equipment, to offset the impact of the tariffs. The negotiations are seen as crucial for both countries to achieve a trade balance that benefits their economies and strengthens economic ties.