President Donald Trump of the United States has announced the imposition of a reciprocal tariff on India beginning April 2. However, India hopes to avert these tariffs and offers tariff reductions under the ongoing bilateral trade agreement between the two nations. Experts suggest there is room for India to reduce import tariffs, and there is domestic support for such a reduction.
Piyush Goyal, India's Minister of Commerce and Industry, is currently in the US, and discussions on a bilateral trade agreement may soon take place in Washington, D.C. It is believed that tariffs on several goods and products could be reduced. According to a Business Today report, India is hoping to partly mitigate the impact of the reciprocal tariff by reducing tariffs on items including automobiles.
The primary goods exported from the USA to India include crude oil, coal, and industrial items. Experts suggest that there is room to cut tariffs on these items without significantly impacting domestic companies.
Additionally, tariff reductions are essential to protecting bilateral trade because the USA is India's largest trade partner and exporter. Trade between the two countries amounts to $190 billion, with the USA accounting for about 18% of India's exports.
After a meeting between Prime Minister Narendra Modi and President Donald Trump, both countries decided to deepen trade ties and double them to $500 billion by 2030. However, Trump's recent announcement that reciprocal tariffs will be imposed starting April 2 has raised concerns in India about its impact on exports.
Director General and CEO of the Federation of Indian Export Organisations, Ajay Sahai, stated that it is difficult to speculate on how this tariff system will work and whether duties will be applied on a country-wide or product-by-product basis. He noted, 'One possibility is the imposition of a nearly 5% tariff across the board since the tariff gap between India and the USA is 4.95.'
In efforts to raise trade to $500 billion by 2030, Sahai expressed hope that concessions would be discussed as part of trade deal talks. It is likely that both countries will sit together with a list of products on which they seek concessions.
Prominent items on which the USA might seek tariff reductions include automobiles, electric vehicles, medical equipment, and electronics. Likewise, India may seek tariff exemptions on goods such as auto parts, pharmaceuticals, textiles, and footwear.
