India is contemplating comprehensive tariff cuts on automobiles and chemicals in response to potential US tariffs under President Trump. These actions aim to establish a favorable trade agreement by fall, increase trade volume significantly by 2030, and mitigate threats posed by reciprocal tariffs. The government is exploring protective measures to prevent an influx of cheaper foreign goods that could harm local industries.

India is considering significant tariff cuts on automobiles and chemicals as the threat of new tariffs from the United States under President Trump looms. These proposed reductions exceed previous tariff adjustments made by Prime Minister Narendra Modi’s government, which included cuts on high-end motorcycles and bourbon whiskey, exports that are crucial to Trump but not extensively sold in India. While the Ministry of Commerce and Industry in New Delhi has not commented, it is evident that these steps aim to facilitate a trade deal with the US by fall. Progress is sought to mitigate the impending reciprocal levies Trump plans for April.

The Indian government’s efforts highlight its commitment to maintaining access to its foremost trading partner, the US, which seeks a more balanced trading dynamic. India’s existing high tariffs render it vulnerable to Trump’s promised comparable duties on Indian exports. The US has indicated a desire to increase its sales of energy and weaponry to India, traditionally supplied by Russia. Moreover, Washington hopes to expand its export categories to include industrial goods, automobiles, and agricultural products.

In response, India is compiling a list of imports from various countries, evaluating the feasibility of additional purchases from the US. Trump recently signed a directive for his administration to propose reciprocal tariffs aimed at restructuring America’s global trade relationships. Deborah Elms, head of trade policy at the Hinrich Foundation, noted, “Under Trump’s proposed reciprocal tariffs, all kinds of presumed unfair trade actions can be added to the tariff calculation.”

However, moving towards a reduction in tariffs may provoke opposition. Concerns have been raised that a blanket reduction could inundate Indian markets with inexpensive Chinese goods, potentially harming domestic industries. As a safeguard, Indian officials are looking to implement non-tariff measures, such as strict quality standards and anti-dumping duties, to protect local production.

During the recent summit between Modi and Trump, both parties expressed their intention to finalize a trade deal and set ambitious goals to elevate trade levels from $127 billion in 2023 to $500 billion by 2030. The US views India as a strategic ally to counterbalance China’s growing assertiveness in the region.

India’s initiatives to lower tariffs on specific goods signify its commitment to fostering a more equitable trade relationship with the United States. The impending reciprocal tariffs from the Trump administration present challenges, but India is proactive in seeking a trade agreement that could shield its economy. The goals set during the Trump-Modi summit reflect both nations’ ambitions for a robust economic partnership moving forward.

Original Source: m.economictimes.com

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