Amid trade talks with US and looming reciprocal tariffs, India cuts industrial tariffs to 10.66%, eyes concessions

Amid ongoing trade negotiations with the US and the impending threat of reciprocal tariffs, India has reduced its average industrial tariff to 10.66%, the Commerce ministry informed the Lok Sabha Tuesday. "As per WTO 2023, India’s simple average tariff rate is 17%. Industrial goods tariff was at 13.5% in 2023... Post Union Budget 2025-26, the simple average industrial tariff has been reduced to 10.66," Jitin Prasada, Minister of State for Commerce and Industry, told the House in response to an unstarred question.

"Both countries would focus on increasing market access, reducing tariff and non-tariff barriers, enhancing supply chain integration and resolving bilateral trade issues," Prasada added on Tuesday. 

The development came amid reports that India is contemplating one of the largest tariff cuts in recent years, potentially scrapping some tariffs entirely. Aimed at addressing US President Donald Trump's reciprocal tariffs that threaten Indian exports, New Delhi is considering slashing tariffs on over half of US imports worth $23 billion in the initial phase of trade discussions, Reuters reported.

The Central government aims to lessen the impact of the trade tariffs, which threaten to affect 87% of India's exports to the US, worth an estimated $66 billion, the report said.

Trump's reciprocal tariffs are set to be implemented from April 2. 

In discussions with the US, India has reportedly expressed willingness to lower tariffs on 55% of the US goods it currently imports, which presently endure tariffs ranging from 5% to 30%. 

This proposal is contingent upon India obtaining concessions on the reciprocal tariffs from the US. The dialogue is part of ongoing efforts to finalise a trade agreement aimed at de-escalating the tariff standoff between the two countries. 

India is also contemplating broader tariff reforms to reduce barriers uniformly, but these discussions remain in preliminary stages and might not be immediately addressed in talks with the US. 

The US maintains a trade deficit of $45.6 billion with India, while its trade-weighted average tariff stands at about 2.2%, compared to India's 12%. Recent talks, initiated during Prime Minister Narendra Modi's visit to the US in February, seek to address these disparities. The tariff negotiations are part of broader discussions led by US Assistant Trade Representative Brendan Lynch, currently visiting India with a delegation for further talks. 

Meanwhile, according to reports, the White House is contemplating a softer approach as industries like automobiles, pharmaceuticals, and semiconductors are unlikely to face immediate levies. India has not finalized potential tariff reductions, with officials indicating that options such as sectoral adjustments and product-by-product negotiations could be explored instead of widespread cuts.