English
India Offers to Narrow Tariff Gap with the U.S. in Exchange for Duty Exemptions
In a significant shift in its trade policy, India has proposed to reduce the tariff gap with the United States to below 4%, down from the current average of approximately 13%. In return, New Delhi is seeking exemptions from existing and potential U.S. tariff hikes imposed under former President Donald Trump's administration, according to sources cited by Reuters.
This move aims to narrow the average tariff differential between the two countries by 9 percentage points — a major step toward easing trade barriers in the world’s fifth-largest economy.
The United States remains India’s largest trading partner, with total bilateral trade reaching approximately $129 billion in 2024. India holds a trade surplus of $45.7 billion in this relationship.
This development comes shortly after the Trump administration announced its first "trade breakthrough" with the United Kingdom — a deal that reduced average British tariffs on American goods but maintained a 10% core U.S. tariff on British exports. The agreement is expected to serve as a model for upcoming deals with other partners such as India and Japan.
Last month, Trump temporarily froze planned reciprocal tariffs for 90 days, a pause that included India, which had been facing potential duties as high as 26%. Nonetheless, the baseline 10% tariff remains in effect during this freeze period.
As part of its current offer, India has proposed eliminating tariffs on 60% of tariff lines in the first phase of the agreement. Additionally, it has granted preferential access to around 90% of U.S. goods, including tariff reductions, according to sources familiar with the matter.
A high-level Indian delegation is expected to visit the United States later this month to advance the negotiations, and Commerce Minister Piyush Goyal may join the talks, although his participation is yet to be confirmed. All officials cited requested anonymity due to the sensitive nature of the discussions.
