India is considering reducing tariffs on more than 30 items and increasing its purchases of US defence and energy products to prevent higher reciprocal tariffs from the United States, according to a report by Nomura.
The report highlights that the country has been working to avoid trade disputes with the US. In its recent Union Budget, the government reduced import duties on a range of products, including electronics, textiles, and high-end motorcycles.
Additionally, India has taken steps to strengthen diplomatic ties with the US, such as agreeing to repatriate over 100 illegal Indian immigrants. Now, India is considering further tariff reductions on luxury vehicles, solar cells, and chemicals as part of its strategy to maintain smooth trade relations.
Nomura said “India is considering reducing tariffs on over 30 items and preparing to increase purchases of US defence and energy”.The report also stated that if India does not reduce higher tariffs on American goods, the US may respond with similar duties on Indian exports.
For example, if India levies a 25 per cent tariff on US automobiles, Washington could impose an equal tariff on Indian vehicles. US President Donald Trump, who has criticized India’s trade policies in the past, has pushed for “reciprocal tariffs” to ensure fair treatment of US exports.
The report pointed out that India has relatively higher tariff rates compared to other countries, making it vulnerable to US retaliatory measures. The US is India’s largest export destination, accounting for approximately 18 per cent of its total exports, which amounted to about 2.2 per cent of India’s GDP in FY24.
India’s trade surplus with the US has been rising in recent years, reaching nearly USD 38 billion in 2024. Key Indian exports to the US include industrial machinery, gems and jewellery, pharmaceuticals, fuels, iron and steel, textiles, vehicles, and chemicals. US President Donald Trump has previously called India the “tariff king” and has emphasized the need for India to buy more American-made security equipment.
In recent discussions with Prime Minister Narendra Modi, he has pushed for a “fair bilateral trading relationship.”To prevent the imposition of higher reciprocal tariffs, the report stated that India is exploring ways to reach an agreement with the US.
In the medium term, the country is also looking to strengthen economic ties with Washington and attract more American supply chains to set up operations in India. Prime Minister Narendra Modi meeting with President Trump on Friday in Washington is expected to discuss tariffs and trade.
