India is exploring a significant tariff reduction on over half of US imports, valued at approximately $23 billion, as part of ongoing trade negotiations designed to ease tensions between the two countries. This potential move, reported by Reuters citing government sources, aims to mitigate the impact of US President Donald Trump’s upcoming global reciprocal tariffs, which are scheduled to take effect from April 2. These tariffs have already caused widespread market disruptions and sparked concerns among several nations, including key US allies in the West.
Indian officials are particularly alarmed by an internal analysis indicating that the new US tariffs could affect a staggering 87% of Indian exports to the US — a trade relationship worth around $66 billion. To soften the blow, India is now prepared to lower tariffs on 55% of US imports, particularly those currently taxed between 5% and 30%. While some tariffs might face substantial cuts, others could be eliminated entirely to encourage smoother trade relations and protect Indian industries from potential retaliation.
The proposal, however, remains under discussion. Indian authorities are carefully evaluating other strategies, including sector-specific tariff adjustments and product-based reductions, to avoid a blanket tariff slash that could destabilize certain domestic sectors. A US delegation, led by Brendan Lynch, Assistant US Trade Representative for South and Central Asia, is scheduled to visit India for high-level trade talks starting Tuesday. Indian negotiators aim to finalize a deal before the US reciprocal tariffs come into force, fearing severe repercussions for key export industries if an agreement isn’t reached in time.
Trade relations between India and the US have long been complex and sometimes contentious. According to World Trade Organisation (WTO) data, the US maintains an average trade-weighted tariff of 2.2%, while India’s is significantly higher at 12%, reflecting the protectionist measures traditionally in place to safeguard Indian industries. The US currently holds a $45.6 billion trade deficit with India, adding to the urgency and sensitivity of the ongoing negotiations.
Prime Minister Narendra Modi’s February visit to the US set the groundwork for accelerated trade discussions, with both nations agreeing to prioritize early-stage deal talks to resolve tariff disputes. However, Indian officials have made it clear that any tariff reductions on their part must be matched by the US relaxing its own reciprocal tariffs. India is particularly wary of conceding too much without a corresponding commitment from Washington.
As part of the current talks, India may reduce duties on a range of US food exports, including almonds, pistachios, oatmeal, and quinoa — items that hold considerable value in US agricultural exports. However, New Delhi has drawn firm boundaries in the negotiations, refusing to lower tariffs on essential agricultural products like meat, maize, wheat, and dairy, which are seen as critical to protecting Indian farmers and food security.
Automobiles, a sector burdened by tariffs exceeding 100%, could see a more gradual reduction. Instead of a sudden cut, the government may opt for phased tariff reductions to allow domestic automakers time to adjust. This approach signals India’s cautious balancing act — fostering better trade relations while safeguarding homegrown industries.
Indian policymakers are particularly concerned about the potential economic fallout for key export sectors, including pharmaceuticals, automobiles, electrical equipment, and machinery — industries that form the backbone of India's global exports. If US tariffs on these products rise by an estimated 6% to 10%, Indian exporters could lose market share to competitors from nations like Indonesia, Israel, and Vietnam, which may offer similar products at more competitive prices.
The looming threat extends to high-value exports such as pearls, mineral fuels, and industrial machinery — all of which face the possibility of increased US tariffs. This could prompt American companies to pivot toward alternative suppliers, potentially causing long-term damage to India’s export-driven sectors.
During a closed-door parliamentary committee meeting on March 10, India’s Trade Secretary Sunil Barthwal underscored the government’s stance. While reiterating India’s commitment to maintaining a robust economic partnership with the US, Barthwal emphasized that national interests would remain non-negotiable. He acknowledged the importance of preventing trade barriers but maintained that India wouldn’t agree to terms that undermine its domestic industries or strategic economic goals.
Meanwhile, US Commerce Secretary Howard Lutnick has publicly urged India to consider more extensive tariff cuts, referencing India’s earlier decision to reduce duties on high-end motorcycles and bourbon whisky — moves seen by the US as signs of goodwill. Washington hopes to build on that momentum, pushing for broader reductions to create a more balanced and mutually beneficial trade relationship.
The stakes in these negotiations are high, with potential outcomes poised to redefine the trade landscape between the two countries. A successful deal could prevent damaging retaliatory tariffs, protect India’s key export markets, and foster greater economic cooperation. However, Indian negotiators remain cautious, balancing the promise of increased market access against the need to shield vulnerable domestic sectors from foreign competition.
The next few weeks could prove pivotal. If both sides find common ground, the resulting agreement may not only prevent a trade standoff but also pave the way for stronger, more resilient economic ties between the world’s two largest democracies.
