India and the United States are working towards improving bilateral trade relations by increasing market access, reducing import duties, and addressing non-tariff barriers. The Indian government provided this update to Parliament, emphasizing ongoing negotiations to enhance trade and supply chain integration.
In a written response to the Lok Sabha, Minister of State for Commerce and Industry Jitin Prasada stated that the United States has not yet imposed reciprocal tariffs on India. He noted that both countries are engaged in discussions to broaden trade ties in a mutually beneficial manner.
“The proposed bilateral trade agreement aims to enhance market access, lower tariff and non-tariff barriers, and strengthen supply chain integration,” Prasada said.
Tariff Policies and Trade Agreements
Following the Union Budget for 2025-26, India’s simple average industrial tariff has been reduced to 10.66%. The country’s overall average tariff rate stands at 17%, with agricultural tariffs averaging 39% and industrial goods at 13.5% as of 2023.
India is also expanding trade partnerships beyond the US. The recently signed Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association (EFTA) is expected to benefit sectors such as seafood, energy, healthcare, financial services, education, pharmaceuticals, and renewable energy. The agreement, signed on March 10, 2024, is anticipated to boost investment flows into India.
India’s Trade with China
Addressing India’s trade with China, Prasada highlighted the role of imports in the country’s integration with global value chains. He stated that many imports from China include raw materials, intermediate goods, and capital goods such as auto components, electronic parts, and pharmaceuticals, which contribute to domestic manufacturing and exports. The government clarified that merchandise imports from China have not grown 2.3 times faster than total imports over the past fifteen years, contrary to some claims.
Production-Linked Incentive (PLI) Schemes
The government also reported progress in its Production-Linked Incentive (PLI) schemes, which have contributed to exports surpassing Rs 5 lakh crore. Key sectors benefiting from the program include electronics, pharmaceuticals, and food processing.
The domestic production of mobile phones has increased significantly, reaching 33 crore units in 2023-24 compared to 5.8 crore units in 2014-15. Meanwhile, imports of mobile phones have declined, with exports now accounting for 50% of India’s total pharmaceutical production. Additionally, domestic manufacturing of essential bulk drugs, including Penicillin G, has helped reduce reliance on imports.
Under the PLI scheme for medical devices, 19 greenfield projects have been commissioned, leading to the production of 44 products that were previously imported.
Ongoing Trade Negotiations
India and the US continue to engage in discussions to strengthen trade cooperation while safeguarding domestic economic interests. The negotiations aim to balance trade policies with economic growth, market expansion, and supply chain resilience. Further updates are expected as discussions progress.
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