India has proposed a substantial reduction in its average tariff gap with the United States—from nearly 13% to under 4%—in a bid to secure a trade agreement that would exempt it from both existing and potential American tariff hikes, according to two Indian government sources familiar with the matter.
The proposal, if accepted, would mark one of the most significant moves by India to lower trade barriers across a broad range of goods. The unweighted average tariff difference between the two countries would shrink by 9 percentage points, potentially boosting bilateral trade flows.
The United States is India’s largest trading partner, with total two-way trade reaching approximately $129 billion in 2024. India currently enjoys a $45.7 billion trade surplus with the US.
This initiative comes after US President Donald Trump last month announced a 90-day suspension on his planned global tariff increases—including a proposed 26% duty on Indian goods—while his administration negotiates new trade arrangements. During this period, a base tariff of 10% still applies to many countries, including India.
The Trump administration has already concluded its first trade agreement under the new framework with the United Kingdom, which retained the 10% base tariff on UK exports but reduced British duties on US imports. That deal is now seen as a template for negotiations with other nations.
India’s Offer: Deep Tariff Cuts and Preferential Access
To move negotiations forward, India has offered to eliminate tariffs on 60% of its tariff lines in the first phase of the proposed deal. Additionally, nearly 90% of goods imported from the US would receive preferential access under the agreement, one of the officials said.
In exchange, New Delhi is seeking exemptions from all current and future tariffs on Indian exports. It is also requesting enhanced market access for key Indian sectors including gems and jewellery, leather, apparel, textiles, plastics, chemicals, seafood (particularly shrimp), oilseeds, and horticultural products like bananas and grapes.
“Preferential market access would allow Indian products to enter the US under more favourable conditions than those offered to other trading partners,” said one of the officials involved in the negotiations.
India is also hoping to secure concessions that would provide it with a competitive edge in select export categories. However, this expectation contrasts with the UK’s recent agreement, which did not include full exemptions from US tariffs.
Indian Concessions to Attract US Support
To make its proposal more appealing to Washington, India is offering to relax export rules for high-value US products. These include aircraft and parts, luxury and electric vehicles, telecom and medical equipment, hydrocarbons, wines and whiskey, specialty fruits like berries and prunes, chemicals, and animal feed.
Beyond tariffs, New Delhi is also pushing for strategic cooperation in critical technology areas. It has requested to be treated on par with close US allies such as the UK, Japan, and Australia in sectors like artificial intelligence, semiconductors, biotech, pharmaceuticals, and telecommunications.
Efforts to expand such cooperation have been hindered by US export control regulations, despite growing bipartisan interest in strengthening tech ties with India.
A delegation of Indian officials is expected to travel to the US later this month to advance the talks. Commerce Minister Piyush Goyal may also join the visit, though his participation has not yet been finalized, according to a fourth source.
India’s Ministry of Commerce, which is leading the negotiations, has not publicly commented on the ongoing discussions.
