NEW DELHI — India and the United States are working towards lowering trade barriers and reaching a bilateral trade deal this year. The two countries have set a target of increasing bilateral trade to $500 billion by 2030, and are determined to achieve this goal through increased market access, reduced tariffs and nontariff barriers, and deeper supply chain integration.
According to External Affairs Ministry spokesperson Randhir Jaiswal, the objective of the bilateral trade agreement is to strengthen and deepen the trade relationship between India and the U.S. in the goods and services sector. This includes addressing issues such as high tariffs and other trade barriers that have been a point of contention between the two countries.
U.S. President Donald Trump has been vocal about his concerns regarding India’s trade policies, accusing the country of imposing unfair trade barriers through high tariffs. He has put pressure on India to lower duties on U.S. imports, citing examples such as the 110% tariff on all car imports. However, India has taken a conciliatory approach and has opted to engage in talks with the U.S. in order to avoid any potential friction.
During a recent White House meeting, Trump stated, “India charges us massive tariffs. Massive. You cannot even sell anything in India. They have agreed. By the way, they want to cut their tariffs way down now because somebody is finally exposing them for what they have done.” This statement highlights the progress that has been made in the negotiations between the two countries.
Indian trade analysts believe that India’s approach towards tariffs is driven by the desire to maintain a strong trade relationship with the U.S. as well as the recognition of the U.S. as a valued strategic partner. India has already taken steps to lower duties on certain imports, such as high-end motorcycles and bourbon, which will benefit American companies.
The U.S. is India’s largest export market, and the country is keen to maintain this relationship. However, there are concerns that the upcoming announcement of reciprocal tariffs by the Trump administration could affect Indian exports to the U.S. in areas such as pharmaceuticals, drugs, and auto components. In 2018, the two-way trade in goods between the countries was over $129 billion, with Indian exports surpassing $87 billion.
In an effort to address these concerns, Indian Commerce Minister Piyush Goyal visited Washington this week to discuss trade issues with American officials, including Commerce Secretary Howard Lutnick. During his visit, Lutnick called on India to reconsider its tariffs in light of the “special relationship” between the two countries. He also urged India to shift its defense equipment purchases away from Russia and towards the U.S.
Analysts believe that increasing defense purchases from the U.S. could help bridge India’s trade surplus with the country, which stood at over $40 billion last year. Lutnick also emphasized the need for India to open its market to U.S. farm exports, a move that India has been hesitant to make due to concerns about the impact on small farmers.
While there is room for India to lower tariffs in several areas outside of agriculture, analysts believe that this sector will remain a sensitive issue during negotiations. Ajay Srivastava, founder of the Global Trade Research Initiative think tank in New Delhi, stated, “I think we can lower tariffs to zero level on most industrial goods, but agriculture we don’t want to touch. It is very sensitive. For us, that is not a trade issue but a livelihood issue, with more than 700 million farmers depending on it for their incomes.”
Other analysts agree that tariffs on imports of farm products, a key area in which the U.S. wants access, could pose a hurdle for the two countries during negotiations. However, both sides are committed to finding a mutually beneficial solution that will strengthen the trade relationship between India and the U.S.
In conclusion, India and the U.S. are making significant efforts to lower trade barriers and reach a bilateral trade deal this year. With a target of $500 billion in bilateral trade by 2030, both countries are determined to increase market access, reduce tariffs and nontariff barriers, and deepen supply chain integration. While there may be challenges along the way, the two nations are committed to finding a solution that will benefit both economies and strengthen their strategic partnership.
