New Delhi: It seems unlikely that New Delhi will accept a zero-for-zero tariff policy with Washington as the United States and India are scheduled to start virtual negotiations on the planned bilateral trade agreement (BTA) this week. Additionally, in light of US President Donald Trump’s “America first” stance, the two sides may not pursue item-by-item parity during these sector-specific discussions, instead focusing on lowering overall tariffs from both sides.
In the upcoming weeks, Washington and New Delhi are expected to hold sector-specific negotiations, and the initial stage of the US-India trade agreement may be released within the 90-day tariff-pause period.
According to a report by NDTV Profit, the terms of reference for the agreement have been finalized, and future talks will mostly be conducted by video conferencing, while in-person meetings may also be held.
What Will Be the Main Topic?
Achieving tariff parity is unlikely to take precedence over discussions surrounding a comprehensive package deal on tariffs and non-tariff barriers.
NDTV Profit was informed by those in the know that “India and the U.S. may not go for item-by-item parity during these sector-specific talks, and the talks may focus upon crafting the deal on lowering the overall tariff down from both sides.”
Impossibility of “Zero-For-Zero” Tariffs
According to a report by Press Trust of India (PTI), the two nations are at different stages of economic development, thus a zero-for-zero tariff plan is also unlikely to be part of the agreement.
According to some trade experts, India can offer the US a “zero-for-zero” tariff plan in response to President Trump’s reciprocal tariff increases.
Zero-for-zero tariffs between the US and the EU, however, are feasible because both countries are developed and advanced, but they would not work well between India and the US, an official told PTI. India would nevertheless need to maintain fair pricing for a variety of items because of its very low per capita income.
Rather of enacting a broad range of tariffs or signing a more comprehensive trade agreement, two countries use the zero-for-zero tariff technique to designate particular product categories and remove the duties on them.
“It does not happen like this that if he will do ‘zero’ in electronics, we will also do in electronics,” the person added, adding that the India-US accord will always be a “package” arrangement that may cover topics like commodities and non-tariff barriers. This is not the case with trade agreements. It is an incorrect way of thinking.
The Delhi-based think tank GTRI recommended in February that India should approach the US with a zero-for-zero tariff plan in response to the US’s tariff increases. According to this plan, the US should lower taxes on a comparable number of commodities in exchange for India identifying tariff lines (or product categories) where it can remove import charges for American imports.
India may consider duty cuts for labor-intensive industries like clothing, textiles, gems and jewelry, leather, plastics, chemicals, oil seeds, shrimp, and horticulture products, while the US is considering duty concessions in industries like certain industrial goods, automobiles (especially electric vehicles), wines, petrochemical products, dairy, and agricultural products like apples, tree nuts, and alfalfa hay.
US-India BTA Discussions
Since March, the US and India have been discussing a bilateral trade agreement (BTA). In order to more than quadruple bilateral commerce from the current level of approximately USD 191 billion to USD 500 billion by 2030, both parties have set a goal to complete the first phase of the agreement by the fall (September–October) of this year.
“Work on the deal has begun. In terms of trade negotiations, India is well ahead of other nations,” the person continued.
The United States was India’s biggest trading partner from 2021–2022 until 2023–2024. About 18% of India’s total goods exports, 6.22% of its imports, and 10.73% of its bilateral trade are attributed to it.
In 2023–2024, India’s trade surplus (the difference between imports and exports) with the United States was USD 35.32 billion.
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