India’s policy pill for Trump to include tariff reductions across sectors from auto to chemicals to IT

India was also among the first countries to approach the United States for negotiations.

The first set of proposals from the Indian side to the Trump administration that are likely to form the broad foundation for a bilateral trade agreement between the two countries India and the US could include reductions in tariffs on imports from the US of commercial crops,  horticulture - such as walnuts, apples and cranberries as well as chemicals and cars. Horticulture crops include fruits, ornamental plants, spices etc. Commercial crops include crops for sale or profit which include coffee, oilseeds, cereals, tobacco etc.

The IT Industry is also batting for zero-to-zero tariffs - imports into India from the US and exports to that country will both carry zero tariffs - and has said that the current reshaping of the global trading system presents a large opportunity for India to both sell and buy.

India’s IT exports including hardware are a significant part of the country’s overall trade. Moreover, the Bilateral Trade agreement gives India the option to reduce tariffs for the United States without being in violation of the WTO rules.

Sources familiar with the matter say that India is clear that it doesn’t want to go the Canadian way in imposing ‘retaliatory tariffs’.

“ India’s priority would be to avoid tariffs.. to avoid tariffs across the board”, says a source who has been in close touch with the negotiators.

India’s negotiations are being led by Commerce Minister, Piyush Goyal along with additional Secretary Rajesh Agarwal and Commerce Secretary Sunil Barthwal. The broad contours of India’s proposal are being finalized to ‘pacify Trump,’ says another source.

One set of proposals is with the Prime Minister’s Office for approval. The next round of talks is expected in the next week.

“It’s the law of the jungle - when those tariffs come - either you retaliate or negotiate. If you negotiate, maybe they will be lower. Our priority should be to avoid tariffs altogether,” says the source.

India’s Challenge 

New Delhi finds itself in a uniquely tough position, it needs to take a proposal to the United States before April 2.

The proposal will lay down the groundwork for a Bilateral Trade Agreement between the two countries.

The logic is that against responding to a proposal, India will be the originator which will set the tone of the agreement and the trade relationship between the two countries.

Experts say that India is possibly in the midst of its toughest trade negotiation in a very long time. US President Donald Trump has called out India as a ‘tariff abuser’ even as he has spoken about his friendship with the Indian Prime Minister, Narendra Modi.

India, like other countries,  has been increasing tariffs to safeguard domestic industry for the past few years, Budget 2025-26, however, eliminated seven additional customs tariff rates for Industrial goods, marking a rationalization after years of raising tariff barriers.

The tricky issues, besides negotiations on agriculture and farm products, would be to explain the 100 per cent duty on whiskey and duties between 40 and 120 percent on almonds among others.

“The one thing you can’t do is fluff or posturing with the US side,” says a source who has been a close observer of the negotiations between the two sides.

Critics and observers alike have called Trump erratic, whimsical, unpredictable and a tough negotiator. And that makes India’s job tougher.

Sources told Moneycontrol that so far, the talks between the US and India “seem to have gone well”.

What will the US look at? 

The United States will look at the seriousness of the offer that the Indian side brings to the table. They will evaluate the areas where India needs to be protectionist, such as agriculture where India's argument would be to safeguard the interest of farmers. And then they will consider the dollar value of the proposals.

The US side will also look at the non-tariff barriers and the Indian side will have to present a plan for reducing non-tariff barriers such as regulations that can impede international trade. This bilateral trade agreement also presents an opportunity for India to leverage the bonhomie between the two leaders and get companies with supply chains in China to move to India.

What’s working for India?

In India’s case, US President Donald Trump has a special camaraderie with the Indian Prime Minister and that gives India some leverage. The Indian Prime Minister has referred to PM Modi as a ‘friend’ while the US President recently shared the Prime Minister’s podcast with Lex Friedman ( a US Podcaster) on a social media platform ‘Truth Social’.

India was also among the first countries to approach the United States for negotiations. India has sent its key leaders to keep the conversation between the two sides going – External Affairs Minister, S Jaishankar, Prime Minister Modi and Commerce and Industry Minister Piyush Goyal have engaged with the Trump administration in the last two months. Overall, the consensus seems to be emerging that the tariff threats present an opportunity for India to reset its trade dynamics.