India recently concluded a bilateral trade agreement with the United Kingdom. The deal would dramatically reduce tariffs on industries such as whisky and cars. This development comes as President Donald Trump highlights India’s high tariff rates, claiming it is “one of the highest tariff nations in the world.” In a bid to foster stronger relations, India has proposed to the United States that it would charge “literally no tariffs” on American goods.
Currently, India and the US are engaged in negotiations to establish a comprehensive trade agreement. Both nations aim to elevate bilateral trade, which previously reached $190 billion, to an ambitious target of $500 billion. This goal comes in the wake of a $45 billion trade deficit that the US holds with India, which President Trump seeks to address.
In April, Trump imposed tariffs of up to 27% on various Indian imports, putting pressure on both countries to find common ground. India and the US are already negotiating to take a “zero-for-zero” approach. This proposal would cut tariffs on every single good traded, with the exception of automobiles and agriculture, phased in over five years. Ajay Srivastava, a trade expert from Delhi, noted that reciprocity is central in Indian negotiation. He highlighted the need for mutual commitment to ensure tariff reductions are reciprocal and uniform.
India’s readiness to dabble in bilateral trade agreements is a world away from its earlier insouciance. India also sealed a huge $100 billion free trade deal with the European Free Trade Association (EFTA) last year. Since then, it has slashed tariffs on all manner of US products – including bourbon whiskey and motorcycles.
President Trump has been publicly positive on India’s offer during talks, hopeful that the $2 billion deal is just around the corner.
“They have offered us a deal where basically they have agreed to charge us literally no tariffs.” – US President Donald Trump
Taken together, these developments increase the urgency for a resolution. Delhi is keen to wrap up a trade deal before Trump’s 90-day freeze on increasing tariffs expires July 9. India, on the other hand, is going at lightning speed in its negotiations. This reflects its real commitment to improving trade relations with the US and its efforts to be proactive about US concerns.
Businesses as large and influential as Apple are quickly realizing that they need to adapt to these new dynamics. They are moving most iPhone production from China to India, underscoring India’s growing importance as a manufacturing base.