India is exploring ways to respond to President Trump’s reciprocal tariffs, aiming to negotiate a Bilateral Trade Agreement to enhance trade relations with the U.S. Prime Minister Modi and Trump have set an ambitious target of USD 500 billion in annual trade by 2030, recognizing the need for equitable trade terms. India has signaled openness to lower tariffs on certain goods to facilitate these negotiations.
India is actively seeking strategies to mitigate the impact of President Trump’s recent reciprocal tariff proposals. During his remarks, Trump highlighted that countries such as the European Union, China, and India impose significantly higher tariffs on American goods than the U.S. does on their products. He criticized India’s auto tariff, which exceeds 100%, and noted that China’s tariffs are substantially higher than those of the U.S., asserting that these practices are unfair.
In discussions between Prime Minister Narendra Modi and President Trump held on February 13, a commitment was made to negotiate a comprehensive trade agreement aimed at achieving a trade volume of USD 500 billion by 2030. This ambitious goal seeks to address the current trade deficit while emphasizing the establishment of new, equitable trade principles.
The framework for this engagement includes negotiations for a multi-sector Bilateral Trade Agreement (BTA) projected for completion by the fall of 2025. Both nations aim to facilitate economic collaboration by reducing tariffs and non-tariff barriers to enhance supply-chain integration. India is hopeful for a positive resolution regarding tariffs, considering the shared interest in promoting trade between the two countries.
Indian Commerce Minister Piyush Goyal is currently in Washington for discussions with U.S. officials regarding the proposed agreement. New Delhi expresses optimism to evade the reciprocal tariffs being implemented by the Trump administration, which the President has repeatedly criticized, calling India a “tariff king”.
In a strategic move to improve relations, India announced a reduction in tariffs on certain goods, including Bourbon whiskey and electronic vehicles, signaling its willingness to negotiate with the United States. The U.S. is also encouraging India to import more American products, including energy resources and defense equipment, to balance the trade deficit favoring India, estimated at USD 45 billion.
In 2023, the U.S. emerged as India’s largest trading partner, with total bilateral trade amounting to USD 190 billion. The U.S. also ranked as the third-largest source of foreign direct investment in India, contributing nearly USD 5 billion. However, Trump’s imposition of tariffs has raised concerns globally regarding a potential trade war, with significant tariffs already applied to imports from Canada, Mexico, and China.
In light of the evolving trade relationship between India and the United States, both nations are working towards an equitable resolution on tariff issues. The upcoming negotiations are pivotal to achieving mutual economic benefits and enhancing bilateral trade, with India proactively lowering tariffs on select goods. The commitment to a significant trade agreement by 2030 reflects the shared ambitions of both countries to strengthen their economic ties, amidst challenges posed by current tariff strategies.
Original Source: m.economictimes.com
