NEW DELHI —
India said Friday it is working to lower trade barriers with the United States as it tries to reach a bilateral trade deal with Washington this year.
The two countries said after a February White House meeting between U.S. President Donald Trump and Indian Prime Minister Narendra Modi that they will try to reach a deal by fall, aiming to increase bilateral trade to $500 billion by 2030.
External Affairs Ministry spokesperson Randhir Jaiswal told reporters Friday the objective of the bilateral trade agreement would be “to strengthen and deepen India-U.S. two-way trade in the goods and services sector, increase market access, reduce tariff and nontariff barriers, and deepen supply chain integration between the two countries.”
Trump has accused Delhi of imposing unfair trade barriers through high tariffs and has been putting pressure on India to cut duties on U.S. imports. India, for example, imposes tariffs of up to 110% on all car imports.
“India charges us massive tariffs. Massive. You cannot even sell anything in India,” Trump said Friday at the White House. “They have agreed. By the way, they want to cut their tariffs way down now because somebody is finally exposing them for what they have done.”
There was no immediate comment from Indian officials.
Conciliatory approach
Analysts say India has adopted a conciliatory approach on tariffs, opting to engage the U.S. in talks as it looks to avoid friction. India already has lowered duties on some imports that will benefit American companies, such as high-end motorcycles and bourbon.
“The U.S. is, first of all, India’s largest export market, so we do not want to upset that,” said New Delhi-based trade analyst Biswajit Dhar. “Then there are other considerations at play. There is a sense that the U.S. is a valued strategic partner, so we don’t want trade tensions to upset that equilibrium, also.”
While India has been spared tariffs so far from the Trump administration, reciprocal tariffs that Trump has said he will be announcing early next month could affect Indian exports to the U.S. in areas from pharmaceuticals and drugs to auto components. Two-way trade in goods between the countries was more than $129 billion last year, with Indian exports surpassing $87 billion.
Indian Commerce Minister Piyush Goyal visited Washington this week to discuss trade issues with American officials, including Commerce Secretary Howard Lutnick.
During remarks to an Indian television network, Lutnick called on India to reconsider its tariffs in light of the “special relationship” with the United States.
“It’s time to do something big, something grand, something that connects India and the United States together, but does it on a broad scale, not product-by-product, but rather the whole thing,” he said speaking Friday from Washington to India Today TV.
Defense purchases
He also said India must shift defense equipment purchases away from Russia and buy more from the U.S.
Analysts say purchasing more military hardware from the U.S. could help bridge India’s trade surplus with the U.S., which stood at more than $40 billion last year.
Lutnick also said he wanted India to open its market to U.S. farm exports, which New Delhi has long resisted for fear it will hurt tens of millions of India’s small farmers.
In New Delhi, trade analysts said there is room for India to lower tariffs in several 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.”
Other analysts agree that tariffs on imports of farm products, a key area in which the U.S. wants access, could pose a hurdle for the two countries during negotiations.
“Agricultural products are a strict ‘no’ for India. This will cause unease here and could become a sticking point as they try to clinch a trade deal,” trade analyst Dhar said.