India plans duty cuts as part of early harvest deal with US
Some of the American imports that this early harvest deal could cover include motor bikes, four-wheelers, fossil fuels and some farm produce such as pulses, though the specifics are being worked on.
India is planning to lay out a road map for duty cuts on certain American imports when a US trade team arrives for discussions next week, people aware of the developments said on Friday, outlining a plan by which New Delhi hopes to avert the retaliatory tariffs that US President Donald Trump has said will be imposed on April 2.
The proposals are likely to be part of what is regarded as an early harvest deal, said the people who spoke on condition of anonymity, and could be presented to the US negotiating team visiting Delhi next week.
The officials outlined specific multilateral legal obligations that will need to be worked around, as reported by HT on March 21. The World Trade Organisation (WTO) trade framework prohibits any member from reducing tariffs for one country without extending the same benefit to other members, except through a free trade agreement (FTA).
Since a comprehensive FTA could take months to negotiate, “the only way is to immediately commit to a bilateral trade agreement, including tariff reduction on identified items under an early harvest deal,” one of these people said.
“It is expected that this matter could be discussed between the negotiating teams of the two countries meeting face-to-face for the first time in New Delhi next week,” this person added, declining to provide specific details of the proposed meeting.
Some of the American imports that this early harvest deal could cover include motor bikes, four-wheelers, fossil fuels and some farm produce such as pulses, though the specifics are being worked on.
To be sure, there’s no certainty that these cuts will help India avoid the retaliatory (or reciprocal) tariffs.
Negotiators from both countries have been engaged in virtual discussions since early March, preparing for the first in-person meeting expected to be led by assistant US Trade Representative Brendan Lynch. Lynch is described as “a veteran trade negotiator handling affairs of the South and Central Asian region for over a decade.”
An early harvest scheme (EHS) typically precedes a comprehensive FTA between two partners and helps build confidence. A second person noted that India signed an EHS with Thailand in 2003, identifying a list of 82 items including mangoes, apples, salmon, certain chemicals, and specific alloys.
“This is the most logical way to address the US’ concerns immediately and to realise the ‘Mission 500’ of the two leaders by 2030,” the second person added.
Prime Minister Narendra Modi and President Donald Trump agreed on February 13 to negotiate the first tranche of a “mutually beneficial, multi-sector” Bilateral Trade Agreement (BTA) by autumn 2025. They also set a “bold new goal” for bilateral trade — “Mission 500” — aiming to more than double total bilateral trade to $500 billion by 2030.
In an interview with Breitbart News published on March 21, President Trump said he has a “very good relationship” with India but complained about high tariffs, which he described as his “only problem” with the country.
“I believe they’re going to probably be lowering those tariffs substantially, but on April 2, we will be charging them the same tariffs they charge us,” Trump told the American news website.
Addressing the matter in Parliament on Friday, minister of state for commerce Jitin Prasada informed the Rajya Sabha that both India and the US “have committed to negotiate a mutually beneficial, multi-sector Bilateral Trade Agreement under which the countries would focus on increasing market access, reducing tariff and non-tariff barriers, enhancing supply chain integration and resolving key trade issues bilaterally.”
Prasada referenced a US “Memorandum on Reciprocal Trade and Tariffs” dated February 13, 2025, which directs the Secretary of Commerce and United States Trade Representative to investigate harm to the US from non-reciprocal trade arrangements and provide remedies for each trading partner.
He clarified that “as on date, there has been no imposition of country-specific including reciprocal tariffs by US on India.” He noted that the US has imposed additional duties on steel and aluminium imports from all countries without exemption, the impact of which “is being closely evaluated due to the fact that there are no exemptions as compared to exemptions earlier to certain major exporting countries in these sectors.”
“The Government of India continues to engage with the Government of United States to achieve enhancement and broadening of bilateral trade ties in a mutually beneficial and fair manner,” Prasada added.
According to the latest commerce ministry data, India exported goods worth $60.04 billion to the US during April-December 2024, marking a 5.76% year-on-year increase. During the same period, imports from the US reached $34.29 billion, up 4.63%, creating a substantial trade surplus for India.
The US Trade Representative’s website provides slightly different figures for the full 2024 calendar year. It states that US total goods trade with India was an estimated $129.2 billion in 2024. US goods exports to India were $41.8 billion, up 3.4% ($1.4 billion) from 2023. US goods imports from India totalled $87.4 billion, up 4.5% ($3.7 billion) from 2023. The US goods trade deficit with India was $45.7 billion in 2024, a 5.4% increase ($2.4 billion) over 2023.
