As trade talks commence, India remains hopeful of escaping reciprocal tariffs from US from April 2

With ongoing talks for a bilateral trade agreement, India is hoping for a reprieve from the reciprocal tariffs on imports that the US is set to impose from April 2. 

Official talks between India and the US on the proposed bilateral trade agreement started on Wednesday with senior officials from both countries sitting down at the table to begin discussions on the contours of the trade deal including timelines and the terms of reference. The two countries hope to finalise the first tranche of the agreement by fall of 2025.

According to sources, India has already indicated products on which it is willing to lower tariffs. These include a range of products from the US including automobiles such as EVs, bikes and wines and alcohol as well as certain farm produce from the US.

Sources said India remains hopeful that the initial offer as well as the ongoing negotiations will give some reprieve from the reciprocal tariffs that US President Donald Trump plans to impose from next month.

A team of officials from the US led by Assistant US Trade Representative for South and Central Asia Brendan Lynch, along with a team of US government officials, are visiting India from March 25-29.

“As directed by the leaders of the two countries, India remains committed to working with the US side in the trade and economic domains to enhance prosperity and innovation in both India and the US, and deepen supply chain integration between the two countries. We look forward to productive and constructive discussions with the incoming US delegation to expand and deepen our bilateral trade and economic ties in a mutually beneficial manner,” the ministry of commerce and industry had said in a statement ahead of the visit.

Following Prime Minister Narendra Modi’s visit to Washington DC to meet the US President, the two countries have agreed to work on the BTA and deepen bilateral trade to $500 billion by 2030.

A report by Emkay Global Financial Services said India could potentially lose about $6 billion (0.16% GDP) in exports to the US (at 10% broad tariffs), with this rising to about $31 billion at 25% tariffs.

“While the nature of reciprocal tariff implementation is unclear, we believe a broad country-level tariff by the US is the most likely scenario, given complications around sector/commodity-level tariffs,” it said. While India could be among the worst hit nations as per broad reciprocal differentials, the key susceptible sectors of auto, pharma, electronics are far better placed than feared, whereas apparel and gems and jewellery are the most exposed.

India’s total exports to US in FY24 stood at $77.5bn (2.1% of GDP); the susceptible sectors the report identified comprise about 1.1% of GDP.