India aims to cut tariffs and relax export controls to achieve a landmark trade agreement with the United States.

Taiwan • Politics • 05/09 11:04
India aims to cut tariffs and relax export controls to achieve a landmark trade agreement with the United States.

Following U.S. President Trump's announcement to pause new global tariff measures for 90 days, India is pushing to reach a bilateral trade agreement with the United States. India has proposed a nine-point plan to narrow the tariff gap from 13% to under 4% and apply zero tariffs to 60% of U.S. imports. India also plans to ease export controls on high-value U.S. products, including sectors like aircraft parts and luxury cars. Negotiations are speeding up between the two countries, and the Indian delegation is expected to visit the U.S. later this month to push forward the agreement process.

Key Updates

18h ago

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05/09 11:04

India aims to cut tariffs and relax export controls to achieve a landmark trade agreement with the United States.

Following U.S. President Trump's announcement to pause new global tariff measures for 90 days, India is pushing to reach a bilateral trade agreement with the United States. India has proposed a nine-point plan to narrow the tariff gap from 13% to under 4% and apply zero tariffs to 60% of U.S. imports. India also plans to ease export controls on high-value U.S. products, including sectors like aircraft parts and luxury cars. Negotiations are speeding up between the two countries, and the Indian delegation is expected to visit the U.S. later this month to push forward the agreement process.

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India Proposes Nine-Point Tariff Reform Plan

India has put forward a nine-point plan to the US, with the core aim of drastically reducing the average tariff gap with the US from the current 13% to less than 4%. This proposal is intended to secure an exemption from existing and potential punitive tariffs imposed by the US, including the 26% reciprocal tariff previously proposed by the Trump administration.

To achieve this goal, India plans to reduce tariffs on 60% of US imports to zero in the first phase of the agreement and offer preferential treatment to nearly 90% of US goods. These preferences cover high-value products, including aircraft and parts, electric vehicles, luxury cars, telecommunications equipment, alcohol, and hydrocarbons.

Bilateral Trade Background and Negotiation Motives

The US is one of India's largest trading partners. According to Al Jazeera, in the first three months of 2024, India's exports to the US reached $27.7 billion, mainly pharmaceuticals and engineering products, while imports from the US were $10.5 billion, primarily aircraft and medical equipment, resulting in a US trade deficit of $17.2 billion. Overall, the total bilateral trade in 2024 was approximately $129 billion, with India having a trade surplus of $45.7 billion with the US.

Facing the Trump administration's tough trade policies and global tariff actions, India hopes to avoid becoming the target of the next wave of tariff sanctions through proactive concessions. On April 2, Trump announced the "Liberation Day" policy, imposing tariffs on goods from multiple countries and providing a 90-day negotiation buffer period. India is actively pushing for an agreement during this time to ensure the stability of its export market.

Zero Tariff Proposal and Reciprocal Conditions

India has proposed to the US a zero-tariff plan for specific American goods, covering categories such as steel, auto parts, and pharmaceuticals. These zero-tariff measures will be based on reciprocity and limited to certain import quotas. This move is seen as a response to US pressure, as Trump has repeatedly criticized India for having "one of the highest tariffs in the world."

On May 7, Trump stated at a White House event with Canadian Prime Minister Mark Carney that India had agreed to reduce tariffs on US goods "to zero," but New Delhi has not officially confirmed this claim. According to Yahoo Finance, this statement may be an exaggerated description of India's phased zero-tariff proposal.

Easing Export Controls and Technology Cooperation Demands

In addition to tariff concessions, India has also proposed easing export controls on high-value US products during negotiations. India seeks greater market access for aircraft parts, luxury cars, electric vehicles, and telecommunications equipment, and is seeking the same treatment from the US in key technology areas such as artificial intelligence, biotechnology, pharmaceuticals, semiconductors, and telecommunications as given to US allies like the UK, Australia, and Japan.

This demand is related to the current US export control policies. India hopes to obtain a technology cooperation framework similar to that provided in the AUKUS agreement to promote the interconnection and development of bilateral high-tech industries.

Indian Delegation to Visit the US to Advance Negotiations

The Indian government plans to send a delegation to Washington later in May to further advance the negotiation process. Indian Commerce and Industry Minister Piyush Goyal may also visit the US, although the itinerary has not been finalized. This action demonstrates New Delhi's high priority on finalizing the agreement as soon as possible.

Currently, the specific text of the agreement or the signing schedule has not been announced, but both parties aim to complete the first phase of the agreement by the fall of 2025 and increase bilateral trade to $500 billion by 2030.

References

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