New Delhi officials said India is discussing a possible trade and investment agreement with the United States.
According to Reuters, Modi's government is seeking to implement tariff cuts on some agricultural and other goods imported mainly from the United States in the hope of reaching a broader trade and investment agreement after President-elect Donald Trump takes office.
A senior government source told Reuters that some officials at India's commerce ministry are preparing to consider cutting production of products such as pork in response to Trump's threat of a “reciprocal tax” on high tariffs on Indian goods. India currently imposes an import tariff of about 45% on pork, which is mainly supplied by the United States.
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Another official with direct knowledge of the trade issues said tariffs on high-end medical equipment such as pacemakers and luxury motorcycles including Harley-Davidsons may also be reduced, citing tariffs of 25% to 60% on these products.
and Bilateral trade between India and the United States India's trade volume exceeded $118 billion in the 2023/24 fiscal year ended in March, and India enjoyed a trade surplus of $32 billion, as the country prepares for trade talks with the United States, aiming to do so when President-elect Donald Trump takes office Later, a broader trade and investment agreement was reached.
LNG, defense procurement are also possible
To address Trump's concerns about trade imbalances, officials also proposed buying more liquefied natural gas and defense equipment from the United States, the second official said.
In fiscal year 2024, India's energy imports from the United States (including crude oil, refined fuels and coal) are estimated at US$12 billion, and imports of aircraft and parts are estimated at US$2 billion. A third government source said such imports could add $5 billion to $10 billion a year.
Government and industry sources spoke on condition of anonymity because the discussions remain confidential.
A Commerce Department spokesman declined to comment.
Commerce Department officials have previously said they would wait for the Trump administration to take office before proposing any trade talks while developing plans for possible negotiations.
Indian officials also see Trump's plan to impose tariffs of up to 60% on Chinese imports as an opportunity to use India as an alternative manufacturing base.
A government source who attended some of the meetings said the government had consulted on the issue within ministries and with local think tanks and industry groups.
India is also keen on producing low-end chips
“This is an opportunity,” said Arvind Virmani, a government adviser and member of NITI Aayog, a state-run policy think tank.
“It is in the interest of the United States and India that more critical or sensitive manufacturing take place in India rather than China,” he said, adding that the Preferential Trade and Investment Agreement was more ambitious than previously proposed. The agreement will benefit both countries.
Ajay Sahai, director general of the Federation of Indian Export Organizations, said that imposing high tariffs on goods from China will accelerate the process of multinational companies moving to India.
“We have to do our homework… Overall, the arrival of Donald Trump is definitely a good thing for India,” he said.
During Trump's first term, a proposal for a small trade deal aimed at resolving trade imbalances and strengthening trade ties through a limited deal was faltered by disagreements over tariffs, market access and intellectual property rights.
India is now seeking a broader deal offering significant concessions, including production-related shipping incentives and support for logistics companies.
“Under Trump's 'Made in America' plan, India can offer supply chain concessions to U.S. companies manufacturing low-end products in India,” said Ram Singh, a trade analyst at the state-run Indian Institute of Foreign Trade.
In semiconductors, for example, India could become a hub for low-end chip production as part of the global supply chain, while U.S. companies focus on high-end products, he said.
Sources pointed out that India has attracted investments such as Apple's iPhone production, and the government plans to provide further incentives in areas such as aircraft maintenance, semiconductors, electronics and renewable energy.
India also plans to allow 100% foreign direct investment in the insurance sector, up from the current 74%, a move that could help leading US insurers such as AIG.
The plan requires parliamentary approval.
- Reuters Additional editing by Jim Pollard
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