Indian government sources say the Modi administration is ready to cut the biggest tariffs in years to negotiate a U.S. import deal with the Trump administration.
India is willing to cut tariffs on more than half of U.S. imports in phase one of the trade deal, Delhi is negotiating with U.S. officials to determine Trump's reciprocal tariffs.
South Asian countries want to mitigate the impact of reciprocal global tariffs by U.S. President Donald Trump Destroy the market And make policy makers scramble even among Western allies.
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In an internal analysis, New Delhi estimates that such reciprocity tariffs will reach 87% of its total exports to the United States, worth $66 billion.
Under the agreement, India is willing to reduce tariffs on US goods by 55%, and currently subject to tariffs ranging from 5% to 30%.
Among such commodities, India is preparing to “substantially” lower tariffs and even completely abolish some imported goods from the United States worth more than $23 billion, a source said.
India's Ministry of Trade, Prime Minister's Office and Government spokesperson did not respond to emails seeking comments.
US-India trade deficit $45 billion: WTO
Overall, the World Trade Organization data shows that the average U.S. trade-weighted tariff is about 2.2%, compared with 12% in India. The U.S. trade deficit with India is $45.6 billion.
During Narendra Modi's US visit in February, the two countries agreed to start negotiations to submit an early trade deal and resolve their stalemate on tariffs.
New Delhi hopes to reach an agreement before announcing reciprocity tariffs, with Brendan Lynch, assistant trade representative for South and Central Asia, heading a delegation of U.S. officials on Tuesday (March 25).
Indian government officials warn that cutting more than half of the U.S. imports depends on the tariffs obtained by mutual tax relief.
One of the officials said the tariff decision was not the final decision, and there were other options for discussion, such as departmental adjustments to tariffs and line-by-line product negotiations, rather than substantial cuts.
India is also considering broader tariff reforms to uniformly reduce barriers, but such discussions are in an early stage and may not be held immediately with the United States, one official said.
USD 11 billion for Indian pharmaceutical companies, risky automatic exports
Although Modi was one of the first leaders to congratulate Trump on his victory in the November election, the U.S. president still calls India a “tariff abuser” and a “tariff king” and vow not to exempt any country from tariffs.
New Delhi estimates tariff rates on items such as pearls, mineral fuels, machinery, boilers and electrical equipment increased by 6% to 10%, due to half of reciprocity taxes and half of U.S. exports.
The second official said $11 billion worth of drug and automobile exports could lead to the most destructive impact of reciprocity tariffs, given their reliance on the U.S. market.
The official added that the new tariffs could benefit alternative suppliers such as Indonesia, Israel and Vietnam.
To ensure the political acceptance of Modi's allies and opposition, India sets a clear red line for negotiations.
A third government official said tariffs on meat, corn, wheat and dairy products are now not between 30 and 60%. However, it can relieve those on almonds, pistachios, oatmeal and quinoa.
India demands “big thinking”
New Delhi will also push for phased cuts in automobile tariffs, now effectively exceeding 100 per cent, a fourth official said.
India's comments on March 10 to comments on the Standing Committee of the Parliament and U.S. Commerce Secretary Howard Lutnick highlighted India's rope walk on the matter.
Sunil Barthwal told the committee that India does not want to lose the United States as a trading partner, but also vowed: “We will not compromise our national interests,” according to two people who attended the closed-door meeting.
Lutnick asked India to “think big” after tariffs on high-end motorcycles and bourbons this year.
“So far, the Modi administration has little interest in the massive tariff cuts Trump is seeking,” said Milan Vaishnav, South Asia political and economic expert at Carnegie International Peace Think Tank.
“The Modi administration may use external pressure from the Trump administration to formulate politically expensive overall cuts, but I didn’t hold my breath.”
- Jim Pollard's additional editor Reuters
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