India offers 9% tariff cut to fast-track $129 billion US trade deal

India is preparing to cut its average tariff differential with the US by nearly 9 percentage points—bringing it down from 13% to under 4%—in a major step toward securing exemptions from President Donald Trump’s current and potential tariff hikes.

The sweeping proposal, not previously reported in full, represents one of New Delhi’s boldest trade liberalisation efforts to date.

It comes as the two countries intensify efforts to finalise a bilateral trade agreement that could reshape economic ties between the world’s largest and fifth-largest economies.

The US is India’s top trading partner, with bilateral trade reaching $129 billion in 2024. India holds a $45.7 billion surplus in that relationship.

With Trump recently concluding a trade deal with the UK and announcing a 90-day pause on new global tariffs, New Delhi is racing to be next in line, aiming to secure a deal before competing countries like Japan do the same.

US wants deeper access

India has offered preferential access to nearly 90% of US imports as part of the trade deal, including plans to drop duties to zero on 60% of tariff lines in the first phase of the agreement.

This offer is designed to mirror the structure of the recent UK-US deal, which lowered average British tariffs on American goods but retained Washington’s 10% base tariff.

For its part, India wants to shield its export sectors—gems and jewellery, leather, apparel, textiles, chemicals, oilseeds, shrimp, and select horticultural produce—by securing preferential market access in the US.

According to officials familiar with the negotiations, India is also seeking special concessions to edge out rival suppliers in these segments.

The trade surplus with the US, which currently stands at $45.7 billion, adds to the urgency for India to secure favourable terms while avoiding broader protectionist measures.

A 10% base tariff remains in place on Indian goods during the 90-day pause declared by Trump last month, which temporarily halted a proposed 26% tariff.

India seeks tech status

Beyond the tariff cuts, India is aiming for strategic recognition in Washington’s high-tech ecosystem.

As part of the discussions, Indian negotiators are requesting that the US treat India on par with allies such as Britain, Australia, and Japan in critical technology areas including artificial intelligence, semiconductors, telecoms, biotechnology, and pharmaceuticals.

This request could face resistance from US regulators, who often enforce stricter technology-sharing rules due to national security and export control frameworks.

However, the push reflects India’s ambition to become a trusted technology partner at a time when Western democracies are looking to diversify away from Chinese supply chains.

India offers incentives

To strengthen its pitch, India has offered to ease export regulations on a wide range of high-value American products.

These include aircraft and parts, electric vehicles, medical devices, luxury cars, wines and whiskey, berries, prunes, hydrocarbons, telecom gear, animal feed, and certain chemicals.

The offer indicates India’s willingness to liberalise areas it has historically guarded, with the aim of making the deal attractive to the Trump administration.

While India hopes to win exemptions from tariffs on all its exports, this expectation contrasts with the UK deal, where the US retained base tariffs even after concessions were made.

Final talks underway

With Japan also racing to finalise a similar trade pact, Indian officials are looking to conclude the deal swiftly.

A delegation is expected to travel to the US later this month to accelerate discussions, and Trade Minister Piyush Goyal may join, although his plans are yet to be confirmed.

India’s trade ministry has not commented publicly on the ongoing talks.

All four government officials speaking on the matter requested anonymity due to the sensitivity of the negotiations.

The deal, if secured, could not only reshape India-US trade but also define New Delhi’s position in a rapidly evolving global supply chain.

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