Indian Prime Minister Narendra Modi is readying further cuts in additional tariffs ahead of his meeting with U.S. President Donald Trump. The government officials said that the move would boost American exports to India and avoid a possible trade war. Modi is to visit the U.S. on Wednesday and Thursday, when Trump is set to announce reciprocal tariffs on several countries as part of his plan to reorder global trade in favor of the United States.
While Trump has not specified the countries targeted by his tariff measures, he has earlier branded India a ‘very big abuser’ in trade. He has also called for India to buy more security equipment made in America to make the bilateral trade more balanced.
India’s Tariff Reductions and Trade Adjustments
To address trade concerns, India is considering tariff cuts in over a dozen sectors, including electronics, medical and surgical equipment, and specific chemicals. These reductions align with New Delhi’s domestic manufacturing plans and are expected to increase U.S. exports, three government officials confirmed. The officials requested anonymity, referring that India will evaluate concessions of such items first sourced from U.S. primarily, or possibly on a surging importations level, that could be products of dish antenna, and even pulp wood products.
The talks between Modi and Trump are likely to include the mini trade deal. A third official said that India wants to avoid a situation like the ‘trade war-like situation that is happening between U.S. and China’, where Trump imposed 10% tariffs on Chinese imports, prompting retaliatory duties from Beijing on American energy.
Ongoing Trade Adjustments and Policy Reforms
The Indian government has already streamlined trade barriers with its annual budget, reducing the average import tariff rates from 13% to 11%. The government is also lowering tax rates on the high-end motorcycle and luxury automobile. India will also review a surcharge it imposed on more than 30 items, ranging from solar cells to premium automobiles.
The meeting between Modi and Trump is expected to cover trade, defense collaboration, and technology, although it has been almost overshadowed by recent deportations of Indians from the U.S. One of the officials stated that the talks would provide ‘political direction’ for bilateral relations, with more detailed trade negotiations following the trip.
Despite Trump’s criticism of India’s trade policies in the past, he called Modi “fantastic.” The United States continues to be India’s largest trading partner, and in 2023-24, bilateral trade topped $118 billion. New Delhi has enjoyed a trade surplus of $32 billion, and Washington sees it as a strategic counterbalance to the increasing Chinese influence in the region.
