With tariff dispute at stake, US-India trade delegation arrives today

A high-profile US trade delegation, led by Brendan Lynch, the US assistant trade representative for South and Central Asia, is set to visit India from 25 to 29 March for crucial discussions on a potential Bilateral Trade Agreement (BTA). The talks come at a pivotal moment as the US prepares to impose reciprocal tariffs on 2 April, a move that could significantly impact Indian exports across several key sectors.

Market access to agricultural products, a historically protected area in Indian imports, is expected to be a major discussion point. Recent remarks by US Commerce Secretary Howard Lutnik have further fueled speculation that the BTA may extend beyond an item-by-item negotiation. Lutnik’s comments questioning why India does not import American corn underscore the broader US concerns about trade imbalances and tariff differentials.

Prime Minister Narendra Modi convened a meeting with commerce minister Piyush Goyal and external affairs minister S. Jaishankar ahead of the delegation’s arrival to deliberate on the impending trade discussions and potential tariff implications.

The Financial Express said Indian officials are expected to push for an exemption from the US‘s reciprocal tariffs, which could impact exports of agriculture, meat, processed food, automobiles, diamonds, gold products, chemicals, and pharmaceuticals. These sectors currently face tariff differentials ranging from 8 per cent to 33 per cent.

This visit precedes upcoming trips by other high-ranking US officials, including national security advisor Mike Waltz and vice-president J.D. Vance, who will hold further consultations leading up to President Donald Trump’s visit later this year for the Quad Summit. The summit is expected to mark the announcement of the first tranche of the BTA between the two nations.

Despite the looming trade tensions, the Indian Commerce Ministry emphasised its commitment to fostering deeper economic ties with the US. In a statement issued on Monday, 24 March, the ministry reaffirmed India's dedication to enhancing trade, innovation, and supply chain integration between the two countries.

While trade negotiations remain the primary agenda, discussions may also touch upon Trump’s recent threat to impose a 25 per cent tariff on countries purchasing oil from Venezuela.

India, which resumed imports from Venezuela in December 2023 following the Biden administration’s relaxation of sanctions, imported 22 million barrels from the country in 2024. Indian public sector undertakings (PSUs) have also invested approximately $1 billion in Venezuelan energy projects.

The US Embassy in India described Lynch’s visit as a reflection of Washington’s commitment to a “productive and balanced trade relationship” with India. The US has repeatedly raised concerns over India’s trade surplus, which currently stands at approximately $45 billion in India’s favor out of a total trade volume of $200 billion.

During a recent interview, Commerce Secretary Lutnik criticised India’s high tariff rates, claiming they averaged 50 per cent compared to the US’s 4 per cent. However, World Trade Organisation (WTO) data indicates that India’s simple average tariff is around 17 per cent. He further argued that India’s agricultural protections unfairly limit American farmers’ access to the Indian market while Indian farmers enjoy significant access to US markets.

India has granted market access to certain American agricultural products, including nuts, duck meat, and apples, but the US is expected to push for further concessions on items such as corn, soybeans, cotton, rice, pulses, and dairy products. Indian negotiators will likely have to balance these demands against domestic agricultural interests.

Despite tensions, Modi’s administration has taken measures to address US concerns. His February visit to Washington resulted in commitments to strengthen trade ties, increase purchases of American energy and defense equipment, and work toward a formal bilateral trade agreement by November.

India has already reduced import duties on select US goods, including bourbon whiskey and premium motorcycles like Harley-Davidson models, and is considering further tariff reductions on automobiles, chemicals, and agricultural products.

The Hindu quoted a Commerce Ministry official as noting that the impact of the reciprocal tariffs on India remains uncertain, as the US is still finalising the details. “Reciprocal tariffs are not something we engage in because it is a US policy. With us, they have chosen a bilateral path, so we are focusing on that,” the official stated.

Last week, President Trump reiterated his position that India will not be exempt from the reciprocal tariffs. “India is one of the highest tariffing nations in the world. I believe they’re probably going to be lowering those tariffs substantially, but on April 2, we will be charging them the same tariffs they charge us,” Trump told Breitbart News.

As India and the US navigate these trade negotiations, the outcome of the upcoming discussions will be crucial in determining the future trajectory of bilateral economic relations. The Indian government is expected to engage strategically to mitigate potential trade disruptions while ensuring the best possible deal for its industries.