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Economy

India offers major tariff cut to fast-track trade deal with Trump

Friday 09 May 2025 - 11:34

By: Zahouani Ilham

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In a significant move to finalize a trade agreement with the United States, India has proposed cutting the average tariff gap between the two countries to under 4%, down from nearly 13%, according to sources familiar with the negotiations. This would be a reduction of approximately 9 percentage points and would mark one of the most ambitious trade liberalization efforts by the Indian government.

India, which currently enjoys a $45.7 billion trade surplus with the U.S., seeks exemption from President Donald Trump's existing and planned tariff hikes in exchange for these concessions. The United States, India's largest trading partner, accounted for about $129 billion in bilateral trade in 2024.

Trump recently celebrated a preliminary trade deal with the United Kingdom, maintaining a 10% base tariff on British goods while reducing average British tariffs on U.S. imports. This could serve as a model for upcoming negotiations with other nations, including India and Japan.

As part of the deal under discussion, India has offered to remove tariffs entirely on 60% of tariff lines in the first phase. Furthermore, the Indian government is proposing preferential access for around 90% of U.S. imports, signaling a deep commitment to advancing the agreement.

Indian officials are expected to travel to Washington this month to continue negotiations. Although Trade Minister Piyush Goyal may join the delegation, his participation has not yet been confirmed.

In return, India is requesting preferential access to the U.S. market for key export sectors like gems and jewelry, textiles, leather, chemicals, and agricultural products. These privileges would give Indian exporters a competitive advantage over other U.S. trading partners.

To make the deal more appealing to the U.S., India has also offered to relax export restrictions on several high-value American goods such as aircraft, luxury vehicles, telecom devices, medical equipment, hydrocarbons, and various food items.

Additionally, India is pressing for equal treatment with U.S. allies like the UK, Australia, and Japan in areas involving critical technologies such as artificial intelligence, biotechnology, telecommunications, and semiconductors a demand that may face challenges under current U.S. policy frameworks.