India has proposed zero tariffs on pharmaceuticals, steel, and auto parts from the United States on a reciprocal basis, up to a specific import volume, as part of trade negotiations aimed at securing a bilateral trade deal by fall 2025. Beyond this threshold, standard duties would apply. The offer was made by Indian trade officials during talks in Washington in late April 2025, prioritizing select sectors to expedite an agreement before the end of a 90-day pause on US reciprocal tariffs.
This move aligns with efforts to strengthen Indo-US trade relations amid a contracting US economy, with Trump indicating potential trade deals could be finalized soon. India is also addressing US concerns over Quality Control Orders by proposing a mutual recognition agreement for regulatory standards in sectors like medical devices and chemicals.
US-India Tariff Negotiations (Up to May 2025)
US-India tariff negotiations have gained momentum in 2025, driven by the second Trump administration’s push for quick bilateral trade deals and India’s strategic aim to strengthen economic ties amid a contracting US economy and India’s robust 7% GDP growth. The current focus is a limited trade agreement targeting zero tariffs on specific sectors by fall 2025, following a 90-day pause on US reciprocal tariffs announced in early 2025.
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During talks in Washington, Indian trade officials proposed zero tariffs on US pharmaceuticals, steel, and auto parts on a reciprocal basis, up to a specified import volume. Beyond this cap, standard duties would apply. This offer prioritizes select sectors to expedite a deal, aligning with Trump’s goal of finalizing trade agreements quickly.
India also proposed a mutual recognition agreement for regulatory standards in sectors like medical devices and chemicals to address US concerns over India’s Quality Control Orders (QCOs), which have been seen as non-tariff barriers. The US has welcomed India’s proposal but seeks broader market access, particularly in agriculture (e.g., dairy, poultry) and digital trade (e.g., easing data localization rules).
Trump has signaled optimism, stating in April 2025 that a deal with India could be finalized “very soon,” leveraging the tariff pause to pressure for concessions. The US is pushing for India to reduce high tariffs on goods like whiskey (150%) and electronics (20%), which have long been contentious. Bilateral trade reached ~$200 billion in 2024, with India running a $36 billion goods trade surplus. The US is India’s largest export market ($83 billion), while India is the US’s 9th largest goods supplier ($44 billion).
The negotiations build on the US-India Trade Policy Forum (revived 2021) and strategic frameworks like the Quad and iCET, which emphasize economic cooperation amid shared concerns over China. Pre-2018: Tariff disputes were frequent, with the US criticizing India’s high ttariffslike the 50% on autos, 100% on agriculture and India raising concerns over US visa restrictions and agricultural subsidies. The Generalized System of Preferences (GSP) allowed duty-free Indian exports worth $5.6 billion until its revocation in 2019.
Trump’s First Term (2018–2020): US imposed 25% steel and 10% aluminum tariffs, impacting India. India retaliated with tariffs on 28 US products (e.g., almonds, apples). US revoked India’s GSP status, escalating tensions. Talks for a limited trade deal stalled over US demands for dairy access and India’s push for GSP restoration.
Biden Era (2021–2024): Tensions eased, with some progress via the Trade Policy Forum (e.g., poultry market access). However, no major tariff reductions were agreed upon. India’s QCOs and digital trade policies (e.g., data localization) remained sticking points, alongside US steel tariffs.
The second Trump administration’s tariff pause and India’s proactive zero-tariff offer mark a shift toward pragmatic, sector-specific negotiations, though a comprehensive free trade agreement (FTA) remains unlikely in the short term. India seeks reciprocal tariff cuts to boost exports (pharmaceuticals, IT services, textiles) and secure US investment in manufacturing under its “Make in India” initiative.
Faces domestic pushback, with experts highlighting concerns about increased competition from US imports in steel and auto parts, potentially impacting local industries. Pushes for H-1B visa reforms to ease access for Indian IT professionals. US aims to reduce India’s trade surplus and secure market access for agricultural and high-tech goods, and viewed India’s tariff offer as a starting point but demands broader concessions, including on non-tariff barriers like QCOs and IP protections for pharmaceuticals.
India leverages the tariff pause to extract commitments, with Trump emphasizing “fair trade” in public statements. US seeks access for dairy and pork, but India resists due to cultural and domestic sensitivities (e.g., dairy tied to small farmers). US opposes India’s data localization rules, while India prioritizes sovereignty over digital infrastructure.
Regulatory Alignment: Mutual recognition of standards (e.g., FDA vs. Indian regulators) remains complex. Indian stakeholders worry about job losses in steel and auto sectors; US agricultural lobbies push for deeper market access. The April 2025 proposal signals a realistic approach, focusing on achievable tariff cuts in pharmaceuticals, steel, and auto parts rather than a broad FTA.
A deal by fall 2025 is plausible if both sides compromise on volume caps and regulatory alignment. Success hinges on addressing non-tariff barriers (e.g., QCOs) and balancing domestic pressures. India’s willingness to offer concessions reflects its strategic need to diversify trade partners amid global uncertainties, while the US sees India as a counterweight to China.