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India has reduced its average industrial tariff to 10.66% amid ongoing trade discussions with the United States and the looming threat of reciprocal tariffs. The announcement was made by the Ministry of Commerce in the Lok Sabha on 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,” Minister of State for Commerce and Industry Jitin Prasada informed the House in response to an unstarred question.
Focus on Market Access and Bilateral Trade Issues
Prasada emphasized that India and the US are working towards resolving trade disputes. “Both countries would focus on increasing market access, reducing tariff and non-tariff barriers, enhancing supply chain integration, and resolving bilateral trade issues,” he said.
This move aligns with reports suggesting India is considering one of its most significant tariff reductions in years, potentially eliminating certain duties altogether. The initiative is seen as a response to US President Donald Trump’s planned reciprocal tariffs, which pose a major threat to Indian exports.
Impact of Reciprocal Tariffs on Indian Exports
The US is set to implement reciprocal tariffs on April 2, a move that could impact 87% of Indian exports to the US, valued at approximately $66 billion. In an effort to mitigate this impact, India is reportedly weighing a tariff reduction on over half of US imports, worth $23 billion, in the initial phase of trade negotiations.
According to reports, India has indicated its willingness to lower tariffs on 55% of US goods currently subject to duties ranging between 5% and 30%. However, these cuts would depend on India securing concessions from the US regarding reciprocal tariffs.
Tariffs Reforms Under Consideration
While discussions with the US primarily focus on resolving immediate trade tensions, India is also evaluating broader tariff reforms aimed at reducing trade barriers more uniformly. However, these reforms are still in the early stages and may not be part of the ongoing negotiations with Washington.
The US currently has a trade deficit of $45.6 billion with India. While the US maintains a trade-weighted average tariff of approximately 2.2%, India’s stands at 12%. The recent trade talks, initiated during Prime Minister Narendra Modi’s visit to the US in February, seek to address these imbalances.
US Signals Possible Easing of Tariffs Plan
Trade discussions are being led by US Assistant Trade Representative Brendan Lynch, who is currently in India with a delegation for further negotiations. Meanwhile, reports suggest that the White House may be considering a more measured approach to its reciprocal tariff policy. Key sectors such as automobiles, pharmaceuticals, and semiconductors are unlikely to face immediate levies.
Also Read: India-U.S. Trade Talks Intensify Ahead Of Tariff Deadline; High-Level U.S. Delegation Set To Visit
