India offers to slash tariff gap by two-thirds in dash to seal trade pact with Trump
NEW DELHI, May 9 (Reuters) - India has offered to slash its tariff gap with the U.S. to less than 4% from nearly 13% now, in exchange for an exemption from President Donald Trump's "current and potential" tariff hikes, two sources said, as both nations move fast to clinch a deal.
This would mean that the average tariff differential between India and the U.S., calculated across all products without weighting for trade volume, would be reduced by 9 percentage points, in one of the most sweeping changes to bring down trade barriers in the world's fifth largest economy.
The United States is India's largest trading partner, with bilateral trade totaling some $129 billion in 2024. The trade balance is currently in favor of India, which runs a $45.7 billion surplus with the U.S.
Trump announced on Thursday his administration's first
"breakthrough deal" with Britain. It lowers average British tariffs on U.S. goods but keeps in place the 10% base tariff imposed by Washington on British goods, likely setting a template for Washington's approach with other trading partners.
Last month, Trump announced a 90-day pause on his long-planned reciprocal tariffs on global trading partners, including a 26% tariff on India, while his administration negotiates trade deals. A 10% base tariff continues to apply to India and many other nations during the pause.
The United States is India's largest trading partner, with bilateral trade totalling some $129 billion in 2024. The trade balance is currently in favour of India, which runs a $45.7 billion surplus with the U.S.
Trump announced on Thursday his administration's first
"breakthrough deal" with Britain. It lowers average British tariffs on U.S. goods but keeps in place the 10% base tariff imposed by Washington on British goods, likely setting a template for Washington's approach with other trading partners.
Last month, Trump announced a 90-day pause on his long-planned reciprocal tariffs on global trading partners, including a 26% tariff on India, while his administration negotiates trade deals. A 10% base tariff continues to apply to India and many other nations during the pause.
All four government officials did not wish to be identified as details of the negotiations are private and sensitive.
India's trade ministry, which is leading talks, did not respond to a request for comment.
Alongside tariff exemptions, India has also asked for preferential market access for key export sectors including gems and jewelry, leather, apparel, textiles, plastics, chemicals, oilseeds, shrimp, and horticultural produce such as bananas and grapes.
"Preferential market access for India would mean better terms of trade for these goods compared to America's other trading partners," the first official said.
India is also looking for concessions that would give it an edge over competitors in supplying "products of interest", the official added.
However, India's expectation of being exempted completely from tariffs on its exports is at odds with the deal struck between the U.S. and Britain.
To make the deal more attractive for Washington, India has offered to ease export regulations on several high-value U.S. exports, the first official said.
These include aircraft and parts, luxury cars and electric vehicles, telecom equipment, medical devices, hydrocarbons, wines and whiskey, berries, prunes, certain chemicals, and animal feed.
Beyond tariffs, India has also asked the U.S. to treat it at par with other top U.S. allies such as Britain, Australia and Japan in critical technology sectors such as AI, telecoms, biotech, pharmaceuticals, and semiconductors.
Washington's desire to share critical technologies with allies like India has often
faced hurdles due to the U.S. government's own restrictive rules.