Exclusive: India eyes tariff cut on $23 bln of US imports, to shield $66 bln in exports, sources say

In an internal analysis, New Delhi estimated such reciprocal tariffs would hit 87% of its total exports to the United States worth $66 billion, two government sources with knowledge of the matter told Reuters.

Under the deal, India is open to reducing tariffs on 55% of U.S. goods it imports that are now subject to tariffs ranging from 5% to 30%, said both sources, who sought anonymity as they were not authorised to speak to the media.

In this category of goods, India is ready to “substantially” lower tariffs or even scrap some entirely, on imported goods worth more than $23 billion from the United States, one of the sources said.

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Overall the U.S. trade-weighted average tariff has been about 2.2%, data from the World Trade Organization shows, compared with India’s 12%. The United States has a trade deficit of $45.6 billion with India.

New Delhi wants to strike a deal before the reciprocal tariffs are announced and Assistant U.S. Trade Representative for South and Central Asia Brendan Lynch will lead a delegation of officials from United States for trade talks from Tuesday.

The Indian government officials warned that cutting tariffs on more than half of U.S. imports hinges on securing relief from reciprocal tax.

The tariff cut decision was not final, with other options under discussion such as sectoral adjustments of tariffs and product-by-product negotiations rather than a wide cut, said one of the officials.

New Delhi estimated increases of 6% to 10% in tariffs on items such as pearls, mineral fuels, machinery, boilers and electrical equipments, which make up half its exports to the United States, due to reciprocal tax, both sources said.

The second official said the $11 billion worth of pharmaceutical and automotive exports may see the most disruptive impact due to reciprocal tariff, given their dependence on the U.S. market.

The new tariffs could benefit alternative suppliers like Indonesia, Israel and Vietnam, the official added. To ensure political acceptance by Modi’s allies and the opposition, India has set clear red lines for the negotiations.

Tariffs on meat, maize, wheat and diary products that now range from 30% to 60%, are off the table, a third government official said. But those on almonds, pistachio, oatmeal and quinoa may be eased.

New Delhi will also push for phased cuts in automobile tariffs, now effectively more than 100%, a fourth official said.

Washington wants India to bring tariffs down to zero or negligible in most sectors, except agriculture, under the bilatera trade deal, Reuters has reported

To date, the Modi government has shown little appetite for sweeping tariff cuts of the kind Trump is seeking,” said Milan Vaishnav, an expert on South Asian politics and economy at the Carnegie Endowment for International Peace think-tank.

“It is possible the Modi government could use external pressure from the Trump administration to enact politically costly, across-the-board cuts, but I am not holding my breath.”

If trump becomes the reason I can finally afford Cheetos I’ll be a bit conflicted