India plans to reduce tariffs on $23 bln in US imports

India is open to cutting tariffs on more than half of its $23 billion worth of US imports in the first phase of a trade deal the two countries are negotiating, Reuters reported, citing sources familiar with the matter. It would be the biggest cut in years as India seeks to cushion the impact of US President Donald Trump’s global tariffs, which are set to take effect on April 2. The sources said New Delhi’s internal audit found that such tariffs would hit 87% of its total exports to the United States, worth $66 billion. India is open to cutting tariffs on 55% of the goods it imports from the US, which currently face tariffs ranging from 5% to 30%. In this category of goods, India is ready to significantly reduce tariffs or even completely eliminate some of them on more than $23 billion worth of U.S. imports.

During Prime Minister Narendra Modi’s visit to the United States in February, the two countries agreed to start talks on a quick trade deal. New Delhi wants to conclude a deal before the reciprocal tariffs are announced, and Brendan Lynch, the assistant U.S. trade representative for South and Central Asia, will lead a delegation of U.S. officials for trade talks starting Tuesday.

Indian government officials have warned that reducing tariffs on more than half of U.S. imports depends on securing a reciprocal tax exemption. The decision to reduce tariffs was not final, and other options such as sectoral tariff adjustments and product-specific negotiations were being discussed.

India is also considering broader tariff reform to bring down barriers more evenly, but such discussions are in their early stages and may not immediately become a topic of discussion with the United States.

New Delhi will raise tariffs on goods such as pearls, fuel, machinery, boilers and electrical equipment, which account for half of its exports to the United States, by 6-10% through reciprocal taxes, according to both sources.

In addition, pharmaceutical and automotive exports worth $11 billion could be most damaged by reciprocal duties, given their dependence on the U.S. market.

The new tariffs could benefit alternative suppliers such as Indonesia, Israel and Vietnam. Duties on meat, corn, wheat and dairy products, which currently range from 30% to 60%, could be eliminated.

New Delhi will also push for a gradual reduction in tariffs on road transport, which currently exceed 100.

India does not want to lose the United States as a trading partner, but “will not compromise on national interests.”

Although Modi was one of the first leaders to congratulate Trump on his election victory in November, the US president continued to call India a “tariff breaker” and “tariff king,” vowing to spare no country from tariffs.

Tags: India, USA