India Weighs Duty Cuts on Select U.S. Imports Under Proposed Trade Deal

Talks Underway to Balance Concessions Without Harming Local Industry

India is considering lowering import duties on select U.S. products as part of the proposed Bilateral Trade Agreement (BTA), sources told The Economic Times. The commerce department has begun consultations with sectoral stakeholders and line ministries to identify goods where tariff reductions can be granted without negatively impacting domestic industries.

Focus Areas: Automobiles & Auto Components

Key sectors under discussion include automobiles and auto components, where U.S. imports do not pose a major competitive threat to Indian manufacturers.

The government’s approach aims to shield the farm sector while ensuring that tariff cuts do not disrupt India’s existing trade structures.

“We have begun talks with line ministries,” an official was quoted as saying by The Economic Times.

India’s Strategy Amid U.S. Reciprocal Tariff Plans

The government is also evaluating the potential impact of the U.S.’s proposed reciprocal tariffs. The assessment focuses on:

• India’s export competitors and their price advantages in the U.S. market
• Strategies to mitigate risks and maintain India’s trade position
• Duty adjustments that could help Indian exporters retain their edge

Currently, India exports auto components worth $15 billion (₹1.2 lakh crore) to the U.S. at zero duty. In contrast, imports of U.S. auto parts into India face tariffs ranging from 5% to 15%. This tariff imbalance was flagged during an inter-ministerial meeting on the India-U.S. trade deal, the report stated.

Goal: $500 Billion Bilateral Trade by 2030

Both nations aim to more than double bilateral trade to $500 billion by 2030. The first phase of the multi-sector BTA is expected to be finalized by autumn 2025.

Recent Duty Reductions on U.S. Imports

India has already implemented duty cuts on several U.S. exports. The Union Budget 2024-25, presented on February 1, reduced tariffs on:

• Bourbon whisky (from 150% to 100%)
• Fish hydrolysate (for aquatic feed)
• Scrap materials
• Satellite ground installations
• Ethernet switches
• Motorcycles

These measures are expected to benefit American exporters and strengthen trade relations.

Impact on Electric Vehicles (EVs)

The report also noted that India-U.S. trade in electric vehicles (EVs) remains minimal.

“The U.S. is a high-cost country, and no major American EV manufacturer currently operates in India. If duties are lowered, it may not lead to a surge in U.S. EV imports,” an official told The Economic Times.

Highlights:

• India is exploring tariff cuts on select U.S. imports under the proposed Bilateral Trade Agreement.
• Auto components and industrial goods are likely areas for duty reductions.
• The government is balancing trade concessions while protecting domestic industries, particularly agriculture.
• U.S. reciprocal tariff plans are being analyzed to ensure India’s trade competitiveness.
• India aims to boost bilateral trade with the U.S. to $500 billion by 2030.
• Recent duty cuts on bourbon whisky, fish hydrolysate, and industrial goods signal growing economic cooperation.

With negotiations underway, India’s trade policy will focus on fostering economic ties while securing strategic advantages for domestic industries.