India eyes tariff cut on many US imports

New Delhi: India is open to cutting tariffs on more than half of US imports worth $23 billion in the first phase of a trade deal the two nations are negotiating, two government sources said, the biggest cut in years, aimed at fending off reciprocal tariffs.

The South Asian nation wants to mitigate the impact of US President Donald Trump's reciprocal worldwide tariffs set to take effect from April 2, a threat that has disrupted markets and sent policymakers scrambling, even among Western allies.

In an internal analysis, the Union government estimated such reciprocal tariffs would hit 87% of its total exports to the United States worth $66 billion, sources said.

Under the deal, India is open to reducing tariffs on 55% of US goods it imports that are now subject to tariffs ranging from 5% to 30%, said the sources.

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, the sources said.

India's trade ministry, the prime minister's office and a government spokesperson did not reply to mail seeking comments. Overall, the US 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.

During Prime Minister Narendra Modi's US visit in February, the two nations agreed to start talks towards clinching an early trade deal and resolving their standoff on tariffs. The Modi government wants to strike a deal before the reciprocal tariffs are announced and Assistant US Trade Representative for South and Central Asia Brendan Lynch will lead a delegation of officials from United States for trade talks from Tuesday.

The Union government officials warned that cutting tariffs on more than half of US 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 the officials.