The US is aiming to bring down its trade deficit of over $40 billion with India by seeking steep tariff cuts in many sectors, such as automobiles, motorcycles, alcoholic beverages and agricultural items.
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India is making a case for redressal of US measures hurting Indian industry, such as taxes on steel & aluminium and auto as well as the proposed taxation on foreign remittances, in the ongoing negotiations for the India-US bilateral trade agreement (BTA).
“While India’s insistence on waiver of full 26 per cent reciprocal tariffs slapped on it by US President Donald Trump, which includes 10 per cent baseline tariffs already imposed, remains at the top of its agenda, it is also trying to fix some of the other issues through the talks,” a source tracking the matter said.
A US delegation led by Additional US Trade Representative is in India from June 4-10 to take forward the BTA negotiations. “This follows from the productive discussions held in May this year when Commerce Ministry Piyush Goyal led a delegation to the USA and held meetings with US Commerce Secretary Howard Lutnick and USTR Jamieson Greer,” another source said.
Trade-off for trade
With the US aiming to bring down its trade deficit of over $40 billion with India by seeking steep tariff cuts in many sectors, such as automobiles, motorcycles, alcoholic beverages and agricultural items, India too is trying to get commitments in labour-intensive sectors such as textiles & garments and leather.
“The two countries are actively engaged in focused discussions to facilitate greater market access, reduce tariff and non-tariff barriers, and enhance supply chain resilience and integration. The ongoing negotiations aim to achieve an expeditious and mutually beneficial conclusion of the initial tranche of the BTA,” the second source said.
While the initial deadline for the first tranche set by the countries was Fall of 2025 (September-October) the attempt is now to reach a deal by July 9. Trump’s 90-day pause period on reciprocal tariffs end on July 9 and the US President has threatened to impose full reciprocal tariffs on countries that fail to strike a deal by then.
“The reciprocal tariffs are under litigation in the US. But as long as the sword hangs on our heads, Indian exporters will suffer,” the source said.
Remittances tax
India also wants the US to roll back the 25 per cent tariffs imposed on steel and aluminium and automobiles & auto parts. “Indian exporters are affected considerably by the 25 per cent sector-specific tariffs. This is especially true for tariffs on steel & aluminium which has hit exports of over $7 billion annually,” the source said.
The Trump regime’s proposal to impose a impose a 3.5 per cent tax on remittances sent abroad by foreign workers, including green card holders and temporary visa workers, is a move that could hit India as it a top remittance recipient.
“India is likely to take up the issue of the proposed imposition of remittances tax with the US and argue against it as it would adversely affect the economy and professionals working abroad,” the source said.
Published on June 6, 2025