It’s important to highlight that the United States has been exerting considerable pressure on India to lower tariffs on several goods, such as vehicles, whiskey, and agricultural products, claiming that the high import duties hinder American exports.
While India did lower customs duties on certain products like premium motorcycles and bourbon in February, the Trump administration has remained unsatisfied, pushing for further cuts. Harley Davidson motorcycles and Tesla vehicles have become a priority for Trump, especially given Elon Musk’s close ties with the U.S. President.
Musk has been actively lobbying for lower import tariffs during his discussions with Indian officials, a request previously declined by the government. Nevertheless, India introduced a new policy last year that implemented a temporary 15% tariff rate, with the condition that participating companies establish manufacturing facilities in the country.
TNNDetailed guidelines regarding these tariffs are expected to be unveiled shortly, as inter-ministerial discussions are underway. A significant reduction in tariffs could potentially reshape investment decisions. With the threat of retaliatory tariffs looming, the commerce department, leading negotiations for a bilateral trade agreement, is collaborating with various government departments and ministries. These entities are actively consulting industry representatives and other relevant stakeholders. While formal negotiations on specific sectors have yet to commence, a delegation headed by India’s chief negotiator, Rajesh Agrawal, is currently in Washington to tackle outstanding issues and explore the possibility of an “early tranche” of agreements.
Initially, discussions between Trump and Indian Prime Minister Narendra Modi aimed to finalize the first tranche by fall (September-October), which would include import duties on goods, non-tariff barriers, and strategies to optimize the supply chain.
India remains hopeful that, in exchange for concessions offered, the Trump administration will abstain from imposing the 26% reciprocal tariffs that are presently on hold for 90 days, while also considering reductions on duties related to labor-intensive exports such as textiles and leather goods from India.
