As US President Donald Trump hinted at a softening of stance on reciprocal tariffs, stating that a “lot of countries” would be given a break on April 2, officials in the Commerce Ministry began bracing for US demands for increased market access, primarily in automobiles, whisky and some agricultural products.
While uncertainty over the White House trade policy continues — especially as Trump said he would impose tariffs on automobiles before the April 2 reciprocal tariffs — the possibility of concessions to certain countries lifted market sentiment globally, including in India, Tuesday.
Formal talks, initially expected to begin Tuesday, were deferred to Wednesday, with the Ministry engaged in drafting “terms of reference” (ToR) based on input from all ministries, a government official told The Indian Express. In trade parlance, the ToR is a document that outlines the scope, objectives of the negotiations.
“Formal talks will begin Wednesday, focusing on the first tranche of the bilateral investment agreement, which involves market access and digital trade. The US has key demands, particularly in the automobile, whisky and agriculture sectors, including genetically modified (GM) products. Labour, environment and government procurement will be part of the second tranche,” the official said.
While both countries have been engaged in discussions, the terms of reference are yet to be exchanged. However, India will primarily push for “concessions on reciprocal tariffs” alongside the removal of certain “labelling-related” non-tariff barriers and demands in the services sector, such as “more visas for working professionals” in the US.
On digital trade, India expects the US to push for greater access to data, challenging India’s strict data localisation norms, which require Indian data to be stored within the country’s borders. During Trump’s first term, disagreements over data localisation were a major source of friction between India and the US.
While India has resisted altering its stance on data localisation under any plurilateral agreements at the WTO, it further tightened its regulations in April 2018, when the Reserve Bank of India (RBI) mandated that payment system providers such as Mastercard and Visa store payment data for Indian residents within India.
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The Reuters news agency reported that India is open to cutting tariffs on more than half of US imports worth $23 billion in the first phase of a trade deal aimed at fending off reciprocal tariffs.
TRUMP’S HINT of concessions on reciprocal tariffs raises investor and industry hopes for a less disruptive US tariff regime. India has also expressed willingness to slash tariffs on a range of US products.
In an internal analysis quoted by Reuters, New Delhi estimated that such reciprocal tariffs would affect 87 per cent of its total exports to the US, valued at $66 billion. Under the deal, India is open to reducing tariffs on 55 per cent of US goods it imports, which are currently subject to tariffs ranging from 5 per cent to 30 per cent.
The Financial Times reported that Trump is considering a two-step approach to implementing his new tariff regime, potentially invoking rarely used emergency powers to impose immediate duties on imports while formal investigations into trading partners take place.
According to the FT, officials are exploring legal avenues to expedite tariff implementation, with Section 301 investigations, the International Emergency Economic Powers Act, and Section 338 of the 1930 Tariff Act among the options under review. These measures could allow the administration to impose duties of up to 50 per cent on certain imports.