New Delhi – In an effort to avoid potential retaliatory tariffs from the United States, India is considering reducing import duties on more than 30 commodities and increasing its purchases of American energy and defense products, according to a report by Nomura.
The study highlights India’s ongoing efforts to prevent trade conflicts with the US. In its latest Union Budget, the Indian government had already lowered import taxes on various goods, including luxury motorcycles, textiles, and electronics. Now, the country is contemplating further tariff reductions on chemicals, solar cells, and high-end automobiles to maintain cordial economic relations with Washington.
India has also agreed to repatriate over 100 undocumented Indian immigrants as part of its broader diplomatic engagement with the US. Nomura’s report states, “India is considering reducing tariffs on over 30 items and preparing to increase purchases of US defense and energy products.”
Concerns Over US Retaliatory Tariffs
The report warns that if India does not lower its tariffs on American goods, the US may impose similar duties on Indian exports. For instance, if India maintains a 25% tariff on US automobiles, Washington could respond by imposing an identical duty on Indian vehicles.
Former US President Donald Trump, known for his strong stance on trade, has previously criticized India’s tariff policies, labeling the country as the “tariff king.” He has repeatedly called for “reciprocal tariffs” to ensure fair treatment of American products in the Indian market.
With the US being India’s largest export destination, accounting for nearly 18% of its total exports—equivalent to 2.2% of the country’s economic output in FY24—the stakes are high. India’s trade surplus with the US rose to approximately USD 38 billion in 2024. Key Indian exports to the US include industrial machinery, jewelry, fuels, iron and steel, textiles, automobiles, chemicals, and pharmaceuticals.
Strengthening Bilateral Trade Relations
Trump, who has historically been critical of India’s trade policies, has emphasized the importance of India increasing its purchase of US-manufactured security equipment. During recent discussions with Prime Minister Narendra Modi, he reiterated the need for a “fair bilateral trading relationship.”
To prevent further trade friction, India is actively exploring measures to reach a compromise with the US. In the short term, the country also aims to attract more American supply chains to establish operations in India, thereby strengthening economic ties with Washington.
The upcoming meeting between Prime Minister Modi and President Trump in Washington on Friday is expected to address trade and tariff concerns. Observers anticipate that both leaders will discuss strategies to ensure a balanced trade relationship, mitigate economic risks, and promote greater bilateral cooperation.
As India seeks to balance its trade relations with the US, the proposed tariff reductions and increased imports of American goods could play a crucial role in maintaining stable economic ties. The discussions between Modi and Trump will be pivotal in determining the future trajectory of Indo-US trade relations, especially as both nations navigate the complexities of global commerce and economic diplomacy.
