GTRI Recommends ‘Zero for Zero’ Tariff Strategy for India-US Trade Relations

New Delhi, Feb 22 (KNN) India should propose a ‘zero for zero tariff strategy’ to the United States, identifying products where it can eliminate tariffs on American imports, according to a report by Delhi-based think tank Global Trade Research Initiative (GTRI). 

The report, released on Friday, suggests that negotiating a full-scale trade agreement could be more complex and may require India to make difficult concessions.

The report advises Indian policymakers to carefully select items for tariff elimination without harming domestic industries, while largely excluding agricultural products. 

This list should be discussed with the US before April, ahead of its planned reciprocal tariff announcement. If the US accepts the proposal, the reciprocal tariff on Indian exports could be significantly reduced or even eliminated. 

In such a scenario, India should avoid further negotiations and be prepared to retaliate against any unreasonable demands, drawing lessons fr0m China's trade strategies.

The exact framework of the US government’s reciprocal tariff policy remains uncertain, particularly whether it will be applied at the product level, sector level, or country level.

"If applied at the product level (specific tariff lines), the impact may be limited, as India and the US may not trade the same products. However, if imposed at the sector level, entire industries could face serious disruptions," the report stated.

GTRI identified four key sectors where India’s tariffs are significantly higher than those of the US, making them potential targets for reciprocal tariffs. 

These include agriculture, meat, and processed food (32.27 per cent tariff differential), automobiles (23.1 per cent), diamonds, gold, and related products (13.32 per cent), and chemicals and pharmaceuticals (8.63 per cent). These sectors are expected to face the highest risks if the US proceeds with a broad-based reciprocal tariff policy.

The report also flagged significant discrepancies in the trade data reported by India and the US for 2024. According to Indian data, exports to the US amounted to USD 73.7 billion, while imports stood at USD 39.1 billion. 

In contrast, US data reported India's exports at USD 91.2 billion and imports at USD 34.3 billion.

"This large gap in reported figures needs to be reconciled before any trade negotiations proceed," the report emphasised, warning that inaccurate data could lead to higher tariffs being imposed on Indian exports.

GTRI’s recommendations come at a critical time, as India seeks to navigate evolving trade policies under the US administration while protecting its domestic industries and export competitiveness.

(KNN Bureau)