Domestic Industry Seeks Comprehensive Tariff Elimination Under BTA
India’s leading industrial bodies are lobbying the government to negotiate a comprehensive zero-to-zero tariff agreement with the United States as part of the proposed Bilateral Trade Agreement (BTA). This request primarily targets high-duty sectors such as steel, aluminium, automobiles, and auto components, where the US currently maintains significant protectionist barriers. The Indian side believes that such a tariff elimination will enhance the competitiveness of Indian exports and reduce compliance costs, allowing domestic manufacturers greater access to the large and lucrative American market. Industry associations are of the view that Indian firms have reached a level of maturity, efficiency, and technological depth to withstand competition from US imports while also expanding their global footprint through reciprocal market access.
Highlights:
Indian industry urges zero-to-zero tariff deal with the US to eliminate high duties on key sectors including steel, aluminium, autos, and components.
The demand reflects confidence in India’s global export capabilities and manufacturing resilience.
Removal of sector-specific tariffs expected to boost cost efficiency and enhance Indian market access in the US.
Zero-duty pact seen as essential to reducing trade imbalances and increasing bilateral economic collaboration.
India Inc Shows Confidence Across Multiple Sectors
Industry leaders have also communicated their strong belief that Indian manufacturers are capable of competing effectively with American imports across a wide array of sectors such as chemicals, pharmaceuticals, engineering goods, electronics, and food processing. This growing confidence is attributed to India’s production-linked incentive (PLI) schemes, improved industrial output, advancements in digital infrastructure, and expanded global supply chain integration. Many companies are already exporting high volumes to developed markets and view this trade agreement as a vehicle to further elevate India’s stature in global value chains. The push for greater integration with US markets is part of a larger economic vision that includes job creation, technology transfer, and export-led growth.
Highlights:
Indian industry showcases confidence in tackling US imports across sectors beyond core commodities.
Strategic readiness spans chemicals, pharma, engineering, electronics, and processed foods.
Firms seek deeper value chain integration with global markets through the BTA.
Industry sees the pact as a catalyst for boosting exports and accelerating technology inflow.
Push for Reciprocal Tariff Reductions in Agriculture and Processed Foods
While advocating zero tariffs for industrial goods, Indian industry stakeholders have taken a more calibrated stance when it comes to agriculture and processed food products. They propose a reciprocal tariff reduction approach, suggesting that both India and the US lower duties gradually and equitably in these sensitive sectors. Domestic agriculture remains a politically and economically sensitive sector, with millions dependent on it for livelihoods. Industry representatives stress that any tariff liberalization in this area must be designed to protect Indian farmers and small food producers from being undercut by heavily subsidized US agricultural imports. Thus, reciprocity and sector-specific protections are central to India’s negotiating strategy.
Highlights:
Agriculture and food processing sectors to follow a reciprocal tariff reduction model rather than full elimination.
Domestic sensitivities around farm incomes and food security guide India’s cautious approach.
Industry urges protection against heavily subsidized US agri-exports entering Indian markets.
Negotiators to balance trade liberalization with safeguarding of domestic agri-economy and rural employment.
Willingness to Open Up on Chemicals, Engineering, Pharma
Indian businesses are ready to open up tariff access in sectors like chemicals, engineering goods, electronics, and pharmaceuticals—segments where India is building competitive advantage—provided the United States offers equivalent market access. These sectors are critical to India’s export diversification strategy and have already witnessed rising global demand. Indian manufacturers are eyeing the American market for both raw material exports and value-added product supply. The industry’s conditional openness to liberalize these areas stems from confidence in quality, production scale, and the rising demand for affordable products that meet international standards.
Highlights:
Indian manufacturers ready to reduce tariffs in key sectors like chemicals, engineering, and pharma in exchange for US tariff concessions.
Focus on building long-term trade relationships in sectors with strong Indian export potential.
Companies seek access to US markets for value-added goods and components.
Support for mutual tariff cuts driven by export competitiveness and growth strategy.
Industry Meets Commerce Ministry, Flags Value Addition Rules
In a detailed consultation session with the Commerce Ministry, Indian industry leaders underscored the need for strict enforcement of value addition and rules-of-origin norms in the proposed BTA. The objective is to prevent indirect exports or re-routed goods from third countries via the US that could dilute the benefits of the agreement. This is particularly important in a zero-duty regime where circumvention risks are higher. Industry has requested the government to ensure that only genuinely US-manufactured goods benefit from duty exemptions under the trade deal and that certification procedures are made robust and transparent to avoid any misuse.
Highlights:
Strong emphasis on strict rules-of-origin to prevent misuse of zero-tariff terms.
Industry demands that value addition verification mechanisms be included in BTA framework.
Concerns raised about third-country products being re-exported via US supply chains.
Commerce Ministry briefed on enforcement safeguards to protect domestic interests.
Steel, Aluminium, Auto Sector Tariff Cuts High on Priority
The Indian side has made a formal request to include high-duty sectors like steel, aluminium, automobiles, and auto components in the priority list of tariff elimination talks. Industry representatives stated that they are fully prepared to lower Indian tariffs to zero in these areas, if the US reciprocates by withdrawing its existing 25% sectoral tariffs. The move, they argue, will improve price competitiveness, simplify documentation, and ensure smoother customs clearance. With Indian steelmakers and auto manufacturers expanding capacity and meeting international emission and safety standards, the removal of duties will help unlock new markets.
Highlights:
High-priority demand for inclusion of steel, aluminium, and auto sectors in zero-tariff pact.
Indian companies prepared to fully eliminate import duties in exchange for US reciprocity.
Tariff removal would reduce export friction and help domestic firms scale in US market.
Industry seeks tariff parity to compete fairly with other global suppliers.
India Likely to Make Substantial Tariff Cuts, Aerospace in Focus
While zero-duty is the preferred outcome, sources suggest that India may still implement substantial tariff cuts across key industrial sectors if full elimination proves infeasible. The aerospace sector is also emerging as a critical area of discussion, with Indian industry seeking technology transfers, joint ventures, and foreign direct investment opportunities from leading American aviation and defense manufacturers. A sectoral tariff relaxation in aerospace could strengthen India’s nascent civil aviation ecosystem, stimulate R&D, and bolster local manufacturing under Make in India.
Highlights:
Substantial tariff reductions likely even if zero-duty model is not fully agreed upon.
Aerospace identified as a high-potential sector for trade and technological partnership.
India aims to attract investment and joint manufacturing in aviation-related sectors.
Trade pact seen as a launchpad for building an indigenous aerospace ecosystem.
US Tariffs Under Trump Administration Still Impacting Trade
The legacy of former US President Donald Trump’s protectionist policies continues to affect India’s trade flows. A 25% import duty on steel, aluminium, and auto components remains applicable on Indian exports, although country-specific surcharges were recently paused for most nations except China. These duties, combined with compliance hurdles, have disrupted pricing negotiations, delayed shipments, and increased landed costs for Indian exporters. The current push for a zero-duty agreement is seen as a corrective measure to neutralize the lingering adverse effects of these sectoral barriers.
Highlights:
Sectoral tariffs imposed during Trump era continue to hinder Indian exporters.
Base import duties remain in place, adding to trade friction and pricing uncertainty.
Indian steel, aluminium, and auto shipments to US face competitive disadvantage.
Bilateral trade deal viewed as a way to reverse adverse effects of past protectionist policies.
Minimal Impact on Steel and Auto Exports, Say Some Officials
Despite industry concerns, government officials have maintained that the impact of US tariffs on Indian steel and automobile exports is relatively low in quantitative terms. According to Steel Secretary Sandeep Poundrik, India exports less than 100,000 metric tonnes of steel to the US annually. Likewise, India exported just $8.9 million worth of vehicles to the US in 2024, which represents a minuscule 0.13% share of the country’s global automobile exports. These figures suggest that while sectoral tariffs pose reputational and strategic challenges, their financial effect remains limited.
Highlights:
Indian steel and auto exports to US are minimal in overall trade volume.
Tariff impact is more strategic than economic in current export scenario.
Officials indicate limited fiscal exposure despite high import duties.
Sectoral engagement in BTA negotiations may serve long-term strategic goals.
India and US Accelerate Trade Talks Under Mission 500
India and the United States are working to finalize the first phase of the BTA ahead of the previously agreed timeline of Autumn 2025, as per the Commerce Ministry’s recent update. The agreement is part of “Mission 500,” a joint initiative to elevate bilateral trade to $500 billion by the year 2030. As part of this effort, negotiators are streamlining issues related to tariff structures, customs procedures, digital trade, and intellectual property rights. Both sides are aiming to institutionalize a trade framework that supports long-term cooperation, aligns with global standards, and reflects shared economic goals.
Highlights:
BTA negotiations fast-tracked under India-US Mission 500 initiative.
Bilateral trade goal set at $500 billion by 2030.
Pact will cover tariffs, digital commerce, IPR, and customs facilitation.
Commerce Ministry aims to conclude first phase of deal well before Autumn 2025.
India’s Export and Import Profile with the US in FY25
The United States continues to hold the top position as India’s largest export destination, with outbound shipments reaching $86.51 billion in FY25—an 11.6% year-on-year growth. On the import side, India brought in $45.33 billion worth of goods from the US, registering a 7.4% increase over the previous fiscal year. Key export items included drug formulations and biologicals, telecom instruments, precious stones, petroleum products, jewellery, cotton garments, and iron and steel products. This robust trade relationship underscores the strategic significance of a comprehensive BTA that can streamline bilateral commerce.
Highlights:
US retained position as India’s top export destination in FY25 with $86.51 billion in shipments.
Imports from US stood at $45.33 billion, making it India’s fourth-largest source.
Major exports included pharmaceuticals, telecom gear, petroleum, and jewellery.
Growth in two-way trade highlights the urgency of a balanced and forward-looking BTA.
