NEW DELHI — India and the United States are working towards a bilateral trade deal that aims to lower trade barriers and increase market access between the two countries. The announcement was made after a February meeting between U.S. President Donald Trump and Indian Prime Minister Narendra Modi, where they set a target of reaching a trade deal by fall and increasing bilateral trade to $500 billion by 2030.
According to External Affairs Ministry spokesperson Randhir Jaiswal, the objective of the trade agreement is to strengthen and deepen the trade relationship between India and the U.S. by reducing tariffs and non-tariff barriers, and promoting supply chain integration.
President Trump has previously accused India of imposing unfair trade barriers through high tariffs, putting pressure on the country to lower duties on U.S. imports. For example, India currently imposes tariffs of up to 110% on all car imports.
However, in a conciliatory approach, India has opted to engage in talks with the U.S. in order to avoid any potential trade friction. In fact, India has already lowered tariffs on some imports that will benefit American companies, such as high-end motorcycles and bourbon.
“The U.S. is India’s largest export market, so we do not want to upset that,” said New Delhi-based trade analyst Biswajit Dhar. “There is also a sense that the U.S. is a valued strategic partner, so we don’t want trade tensions to disrupt that relationship.”
While India has been spared tariffs from the Trump administration so far, there are concerns that reciprocal tariffs, which Trump has said he will announce early next month, could affect Indian exports to the U.S. in areas such as pharmaceuticals, drugs, and auto components. In 2018, two-way trade in goods between the two countries was over $129 billion, with Indian exports surpassing $87 billion.
To address these concerns, Indian Commerce Minister Piyush Goyal visited Washington this week to discuss trade issues with American officials, including Commerce Secretary Howard Lutnick.
Speaking to an Indian television network, Lutnick emphasized the “special relationship” between the two countries and called on India to reconsider its tariffs. He also urged India to shift its defense equipment purchases away from Russia and towards the U.S.
This move could potentially help bridge India’s trade surplus with the U.S., which stood at over $40 billion last year. Lutnick also expressed a desire for India to open its market to U.S. farm exports, which has been a contentious issue in previous trade negotiations.
However, some trade analysts in New Delhi believe that there is room for India to lower tariffs in other areas outside of agriculture.
“I think we can lower tariffs to zero level on most industrial goods, but agriculture we don’t want to touch. It is very sensitive,” said Ajay Srivastava, founder of the Global Trade Research Initiative think tank in New Delhi. “For us, that is not a trade issue but a livelihood issue, with more than 700 million farmers depending on it for their incomes.”
Others agree that agriculture is a sensitive topic for India and could potentially become a sticking point during negotiations.
“While India may be open to lowering tariffs on most industrial goods, agriculture remains a strict ‘no’ for the country. This could cause unease and become a hurdle in clinching a trade deal,” said trade analyst Biswajit Dhar.
Despite potential challenges, both India and the U.S. are committed to reaching a trade deal that benefits both countries. The two nations have a long-standing trade relationship and are looking to strengthen it even further through this agreement.
As the world’s largest democracies, India and the U.S. share a strong bond and have the potential to become key economic partners. With the right trade deal in place, both countries can unlock new opportunities for growth and prosperity.
It is time for India and the U.S. to come together and do something big, something grand, that connects the two nations on a broad scale. Let us work towards a trade deal that not only benefits our economies but also strengthens our strategic partnership. The future is bright for India-U.S. trade, and we must seize this opportunity to make it even stronger.
