Will India press for an early harvest in trade talks with US?

A US delegation led by Assistant US Trade Representative Brendan Lynch will discuss trade and tariff matters with Indian officials over three days beginning Wednesday, advancing negotiations conducted virtually since an Indian delegation visited the US.

"Talks have been going on virtually after the Indian delegation's visit to Washington in early March. We are positive about the discussions, and the sentiment is shared by the other side as well," one of the three officials said. India is keen to strike an early harvest deal--an agreement covering a limited range of goods--before the stated plans to tie up a bilateral trade agreement (BTA) by fall.

According to a second official, the two countries have informally exchanged a list of products where they are keen on securing duty concessions. New Delhi is trying to avoid reciprocal US levies on its key exports such as garments, engineering, electronics, pharmaceuticals, and gems and jewellery. These items together accounted for around 72.7% of the total goods trade between India and the US in FY24, contributing $56.34 billion out of the overall trade of $77.52 billion.

Also read | India and US move forward with bilateral trade agreement, but no talks on reciprocal tariffs

The US has imposed tariffs on all steel imports, and vowed reciprocal levies on all imports starting 2 April. US president Donald Trump has repeatedly complained that India's tariffs are too high, and that they put American exports at a disadvantage. A key objective of Indian trade officials will be to avoid reciprocal levies.

Mint reported on 10 March that both sides are keen on a preliminary trade agreement, with discussions focused on proposed tariff concessions for lentils, almonds, and advanced technology products in the pharmaceutical sector, while sensitive issues such as immigration policies and intellectual property (IP) transfers are being kept off the table. The discussions would revolve around priority sectors where both nations seek greater market access and trade facilitation.

“The schedule of tariff cuts will also be discussed, including when the first round of reductions will begin. Similarly, the talks will work on deciding the timeline for subsequent rounds of duty cuts and their phased implementation," said the third official.

“The first part of the BTA will focus on restructuring tariffs on key goods with export potential for both nations to help reduce trade imbalances. The second part will address tariff and non-tariff barriers in services," the official added.

Also read | Trump brandishes tariffs, but India and UK are back talking trade

The US is seeking technology partnerships, lower duties on key imports, and greater access for its farm products, such as cotton, vannamei shrimp, lentils, and apples. Talks also include reducing tariffs on almonds, quinoa, automobiles, medical devices like pacemakers and stents, and luxury motorcycles, among others. Currently, the duty on US-origin vannamei shrimp is 30%, with exports to India valued at $13.76 million in FY24, while the duty on apples is 50%, with exports to India worth $21.33 million in FY24, commerce ministry data showed.

Electronics and industrial goods, such as EV battery and mobile phone components, are also under discussion. However, key farm products like meat, maize, wheat, and dairy are likely to stay protected.

The BTA was mentioned in the joint statement issued after Prime Minister Narendra Modi’s meeting with Trump on 13 February in Washington. The two leaders had announced plans to negotiate the first part of a multi-sector BTA between September and November.

On Monday, Reuters reported that India is open to reducing tariffs on 55% of US goods that now attract import tariffs of 5% to 30%. In this category of goods, India is ready to "substantially" lower tariffs or even scrap some entirely, on imported goods worth more than $23 billion from the US, the report said.

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Queries emailed to spokespersons of the ministries of commerce and external affairs remained unanswered till press time.

“We don't know how the reciprocal tariff will be structured—whether it will be item-wise or chapter-wise. There is uncertainty among exporters. Even if duties on US products are revised, India will still be in a gaining position," said Pankaj Chadha, chairman, Engineering Export Promotion Council (EEPC).

However, Chadha expressed his concern that the 25% tariff on Indian steel imports is expected to significantly impact Indian steel exporters, particularly micro, small, and medium enterprises (MSMEs). “As larger steel producers have limited exposure to US exports, MSMEs, which often specialize in niche products like stainless steel and industrial-use steel, are more vulnerable to these tariffs," he said.

To be sure, India has revised tariffs on several US products to address trade concerns. The import duty on bourbon whiskey has been reduced from 150% to 100%. Tariffs on Harley-Davidson motorcycles have been lowered from 50% to 30%, and the duty on ethernet switches has been cut from 20% to 10%. On Monday, India decided to drop the so-called Google tax, a levy on multinational companies providing services in India, in an apparent move to placate the US.

Also read | Trump's tariffs cloud India's March exports

At the same time, commerce ministry data shows that import duties on several high-value American products into India are negligible. For instance, in FY24, petroleum crude—the US’s top export to India valued at $5.03 billion—was taxed at ₹1 per tonne, making it one of the lowest-taxed imports despite its high trade value. Other key exports from the US, including coal (valued at $4.2 billion in FY24), large aircraft ($1.94 billion), and liquefied natural gas ($1.41 billion), face 2.5% tariff.

“To avoid reciprocal tariffs on key exports like textiles and engineering goods, India must negotiate reduced non-tariff barriers and align product standards. By leveraging the PLI scheme and FTA frameworks, India can push for duty concessions while ensuring market access for US goods. Strategic positioning on value-added exports and clarity on rules of origin can safeguard millions of jobs in the MSME and export sectors. A data-driven, sector-wise negotiation is essential to ensure mutual benefit without compromising domestic competitiveness," said Sunil Kharbanda, co-founder and chief revenue officer of Trezix, a SaaS platform for importers and exporters.

Earlier, Mint reported on 7 March that the US has demanded tariff concessions on petrochemicals, while India is looking for greater value addition to be done in India—less imports from the US of finished goods and more of raw materials to be processed in India.

And read | Why India’s electronics sector is least at risk from Trump's reciprocal tariff scrutiny

At the same time, India’s textile industry has urged the Centre to push for nil tariffs both ways for textile and apparel trade, Mint reported on 8 March.

Trade between the two countries currently shows a healthy surplus for India. India’s merchandise exports to the US in FY24 were $77.52 billion, and imports were $42.19 billion, according to data from the commerce ministry. This fiscal (April to December), India’s exports to the US were $60.04 billion, and imports were $25.75 billion.