How India plans to tackle Donald Trump’s reciprocal tariff policy? Govt replies in Lok Sabha

India and the United States will focus on increasing market access, reducing tariff and non-tariff barriers, and enhancing supply chain integration to strengthen bilateral trade relations, Parliament was informed on Tuesday.

In a written reply to Lok Sabha, Minister of State for Commerce and Industry Jitin Prasada said both nations are working towards negotiating a mutually beneficial, multi-sector bilateral trade agreement.

“Both countries plan to negotiate a mutually beneficial, multi-sector Bilateral Trade Agreement. Both countries would focus on increasing market access, reducing tariff and non-tariff barriers, and enhancing supply chain integration,” Prasada said.

The United States, under the new Donald Trump administration, announced its plan to impose reciprocal tariffs to counter non-reciprocal trading arrangements with trading partners. Tariffs are import duties imposed and collected by the government and paid by companies to bring foreign goods into the country.

The Trump administration has set April 2 deadline for the reciprocal tariffs to come into effect.

Prasada highlighted that while the US has issued a memorandum on reciprocal trade and tariffs, calling for an investigation into non-reciprocal trade arrangements, no reciprocal tariffs have been imposed on Indian exports so far.

“As on date, reciprocal tariffs have not been applied by US on India,” the minister said.

In 2023, the US-India bilateral trade in goods and services stood at USD 190.08 billion (USD 123.89 billion in goods and USD 66.19 billion in services trade). That year, India's merchandise exports to the US stood at USD 83.77 billion, while imports were USD 40.12 billion, leaving a trade gap of USD 43.65 billion in favour of India.

During 2021-24, America was India's largest trading partner. The US is one of the few countries with which India has a trade surplus.

"The Government of India continues to engage with the Government of United States to achieve enhancement and broadening of bilateral trade ties in a mutually beneficial and fair manner," Prasada said.

In a separate reply, the minister said that India bound to the World Trade Organization's maximum tariff that can be applied to a given commodity line, adding that the tariffs applied are "generally below" the bound tariff.

"India is moving towards having Preferential/Free Trade Agreements wherein customs tariffs and non-tariff barriers are reduced or eliminated on substantial trade between the PTA/FTA members," he said.