India is contemplating a reduction in tariffs on over 30 imported items, as reported by Nomura. This initiative aligns with India’s broader strategy to prevent potential reciprocal tariffs from the U.S. and to enhance bilateral economic ties.
Recently, the Indian government, through its Union Budget, has already lowered import duties on various products, including electronics, textiles, and high-end motorcycles. These measures are part of India’s ongoing efforts to mitigate trade disputes and create a more favorable environment for international commerce.
In addition to tariff adjustments, India has taken diplomatic steps to strengthen its relationship with the U.S., such as agreeing to repatriate over 100 illegal Indian immigrants. Looking ahead, India is considering further tariff reductions on luxury vehicles, solar cells, and chemicals. This approach is intended to maintain amicable trade relations and prevent the imposition of higher reciprocal tariffs by the U.S.
Nomura’s report indicates that if India does not reduce higher tariffs on American goods, the U.S. may respond with similar duties on Indian exports. For instance, if India levies a 25% tariff on U.S. automobiles, Washington could impose an equal tariff on Indian vehicles. U.S. President Donald Trump has previously criticized India’s trade policies and has advocated for “reciprocal tariffs” to ensure fair treatment of U.S. exports.
The report also highlights that India has relatively higher tariff rates compared to other countries, making it vulnerable to U.S. retaliatory measures. The U.S. is India’s largest export destination, accounting for approximately 18% of its total exports, which amounted to about 2.2% of India’s GDP in the fiscal year 2023-24. India’s trade surplus with the U.S. has been rising in recent years, reaching nearly USD 38 billion in 2024. Key Indian exports to the U.S. include industrial machinery, gems and jewelry, pharmaceuticals, fuels, iron and steel, textiles, vehicles, and chemicals.
To prevent the imposition of higher reciprocal tariffs, India is exploring ways to reach an agreement with the U.S. In the medium term, the country is also looking to strengthen economic ties with Washington and attract more American supply chains to set up operations in India. Prime Minister Narendra Modi’s upcoming meeting with President Trump is expected to discuss these issues to maintain smooth trade relations.
In summary, India’s consideration of reducing tariffs on certain U.S. imports reflects its commitment to fostering a harmonious trade relationship with the United States. By addressing tariff disparities and enhancing cooperation, both nations aim to achieve mutually beneficial economic outcomes.
