India, US trade talks may go beyond tariffs
The US side wants negotiations broadly on sectors such as agricultural products, alcoholic beverages and automobiles, a source said.
The US is pushing for India to reduce high tariff barriers for all American goods in one comprehensive move rather than adopting a piecemeal approach, according to people familiar with the negotiations ahead of crucial talks this week.
In exchange, Washington is willing to address New Delhi’s concerns through built-in mechanisms such as quota restrictions in the proposed bilateral trade agreement to protect Indian farmers and small industries, said these people, who asked not to be named.
The US team led by assistant trade representative Brendan Lynch and the Indian team led by commerce ministry’s additional secretary Rajesh Agarwal are scheduled to begin their first three-day face-to-face interaction on Wednesday in New Delhi. The talks come amid growing pressure as President Donald Trump’s April 2 deadline for imposing reciprocal tariffs approaches.
New Delhi’s approach mirrors mechanisms India has already adopted in recent free trade agreements with Australia and the United Arab Emirates (UAE), they added. The India-Australia Economic Cooperation and Trade Agreement (ECTA) includes quotas for imports of Australian almonds, cotton, lentils, pears, oranges and mandarins.
Similarly, the India-UAE Comprehensive Economic Partnership Agreement (CEPA) permits the UAE to export up to 200 metric tonnes of gold annually with a 1% tariff concession under a tariff rate quota (TRQ). TRQ is a mechanism often used for agricultural items that allows a set quantity of specific products to be imported at a concessional rate. Quantities inside a quota are charged nil or lower import duty rates compared to those outside.
“They will initially fix terms of reference, schedules and scope for negotiating a bilateral trade agreement by September 2025 as envisaged by the February 13 joint statement of Prime Minister Narendra Modi and President Donald Trump,” one person said.
A second source said the US side wants negotiations broadly on sectors such as agricultural products, alcoholic beverages and automobiles, instead of specific individual items. “They want the trade deal to be comprehensive,” the official said.
The Indian side is reportedly willing to show flexibility in providing market access for US goods that are not produced by Indian manufacturers, thereby protecting the interests of domestic industry, especially medium and small-scale units, according to the second official.
India has already taken some steps to placate the US. In February, it slashed tariffs on motorcycles and bourbon (an American whiskey). More recently, it proposed to remove the 6% Google tax (Equalisation Levy on online advertisements). However, the second official noted that these moves, while “good for signalling,” are not substantial enough to avoid the April 2 deadline.
The import duty reduction on bourbon was highlighted as a win for the so-called Red states and districts in the US, which produce most of the beverage and are areas where Trump draws his support from.
Separately, news agency Reuters reported on Tuesday that India is open to cutting tariffs on more than half of US imports worth $23 billion in the first phase of the trade deal the two nations are negotiating.
“In an internal analysis, New Delhi estimated such reciprocal tariffs would hit 87% of its total exports to the United States worth $66 billion,” the Reuters report said, quoting two government officials who asked not to be named.
Under the proposed deal, India is open to reducing tariffs on 55% of US goods it imports that are currently subject to tariffs ranging from 5% to 30%, according to the report. In this category of goods, India is ready to “substantially” lower tariffs or even scrap some entirely on imported goods worth more than $23 billion from the United States, the report added.
Reuters noted that the commerce ministry, the Prime Minister’s Office and a government spokesperson did not respond to its email queries on the matter.
