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India has offered “deep” cuts to its import tariffs on a swath of goods in talks with the US, but is seeking to retain its high levies on sensitive agricultural commodities such as foodgrains and dairy products, according to two people with knowledge of the negotiations.
The government of Prime Minister Narendra Modi is racing to secure a preliminary trade agreement with the US to forestall President Donald Trump’s threatened imposition of a 26 per cent “reciprocal tariff” on all Indian goods from July 9.
“There is a possibility of a very deep tariff reduction from India under the bilateral trade agreement,” said one of the people familiar with India’s stance on the talks, who asked not to be identified because they were confidential. “But this is subject to a very balanced outcome for both sides.”
The people with knowledge of the talks declined to give details of the range of US goods on which New Delhi had offered to substantially cut tariffs because the negotiations were at an “early stage” and might be complicated by any backlash from affected industries.
But they said India’s trade negotiators had signalled flexibility on less sensitive farm products such as almonds, which are currently subject to tariffs of up to 120 per cent, and New Delhi might also cut its tariffs of 2.5 to 3 per cent on imported oil and gas.
Indian trade officials have privately said any opening to the US would in large part mirror that seen in other recent trade pacts. In a deal with the UK agreed this month, India agreed to cut tariffs on alcoholic spirits, cars including electric vehicles and car parts, and engineering goods.
The descriptions of India’s offer so far suggest it will fall far short of expectations voiced by Trump last month, when he said: “They’ve offered us a deal where basically they’re willing to literally charge us no tariff.”
India’s trade negotiators were taking a firm line on retaining its hefty duties on core agricultural commodities such as wheat, rice and maize and on dairy products, sectors that employ millions of Indians, the two people said.
India currently imposes tariffs of 70-80 per cent on US rice and of 30-60 per cent on American dairy products.
For its part, New Delhi has pushed Washington to cut US tariffs for goods made by labour-intensive industries including gems and jewellery, textiles, footwear, leather and handicrafts, the people said.
Modi’s government would also push for social security payment exemptions for Indian workers posted to the US on short-term visas. India has asked Washington to grant this before and won a similar concession from the UK in the agreement announced this month.
India’s commerce ministry declined to comment. The White House, US commerce department and office of the US trade representative did not immediately respond to requests for comment.
Trump in early April paused for 90 days the “reciprocal tariffs” he imposed on India and scores of other countries, but retained a blanket import duty of 10 per cent.
India, which has some of the world’s highest average tariffs, is now rushing to secure a framework agreement with the US. Indian commerce minister Piyush Goyal met US counterpart Howard Lutnick and US trade representative Jamieson Greer in Washington last week.
The two countries say they plan to agree the first tranche of a bilateral trade agreement by the autumn and to more than double bilateral trade to $500bn by 2030.
India, the world’s largest milk producer, has successfully pushed to protect big, politically sensitive sectors such as dairy in other recent trade pacts, including one with Australia in 2022. India has almost 200,000 dairy co-operative societies totalling about 15mn members, mainly small herding families.
India and the US have two of the world’s three largest farming sectors, but New Delhi has since independence in 1947 kept high tariff walls around agriculture, which employs nearly half of the workforce of the world’s most populous country. Agriculture is a sensitive topic for the Modi government, which was in 2021 forced to abandon legislation reforming the sector after mass farmer protests.
India has made similar demands to protect dairy and other sensitive farming sectors in trade talks with the EU, according to senior European diplomats and Indian officials in New Delhi. However, the negotiations with Washington are particularly challenging as the US is India’s largest trading partner, and Trump has frequently criticised its high import levies, once even calling it a “tariff king”.
Trump last week criticised iPhone maker Apple’s plans to expand manufacturing in India, which has already helped make mobile phones one of the country’s biggest exports to the US.
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