Jobaaj Stories
Why India Isn’t Ready for a Zero-Tariff Trade Pact
India and the United States are working on a new trade agreement, but New Delhi is not likely to agree to a "zero-for-zero" tariff arrangement. This type of agreement, where both countries agree to eliminate tariffs on certain goods, usually works best between economies that are more equal in terms of development.
According to Indian trade officials, a zero-for-zero model is more suitable for deals between the U.S. and the European Union, where economic conditions are similar. In contrast, India’s economy is still developing and more dependent on protecting certain domestic industries, making such a model harder to accept.
A Broader Trade Agreement Is on the Table
Instead of focusing on eliminating tariffs across the board, India and the U.S. are looking to negotiate a broader trade deal. This comprehensive agreement would include discussions about trade in goods, services, digital economy policies, and the removal of non-tariff barriers such as import rules and product standards.
India’s goal is to protect its farmers and small manufacturers, while still working toward a long-term increase in trade. U.S. officials also want to ensure the agreement benefits American exports and industries.
Trade Talks Aim to Boost Bilateral Trade to $500 Billion
Both nations have committed to strengthening economic ties, with an ambitious goal of more than doubling bilateral trade—from around $190 billion today to $500 billion by 2030. This was discussed during recent meetings between Indian and American officials, which included working groups across several industries like agriculture, technology, and services.
The trade talks officially began in March, and both sides have agreed to continue with sector-specific discussions through the rest of the year.
U.S. Waives Tariffs for Now, India Responds Calmly
In a positive move, the U.S. recently paused some of its retaliatory tariffs against India and other countries. These tariffs were originally put in place in response to digital services taxes. Although the U.S. has since imposed new tariffs on certain Indian imports—up to 26%—India has chosen not to respond with countermeasures.
Indian officials say they want to keep the talks on track and avoid sparking a new trade conflict. The country is instead focused on resolving outstanding issues through negotiation.
The Bigger Picture: Strategic Economic Cooperation
This trade discussion is part of a larger U.S.-India strategy to deepen political and economic relations. As both countries see growing tensions with China, they are also strengthening their partnerships with each other, not just in trade but in defense, technology, and energy.
A balanced trade agreement that respects India’s development goals while expanding market access for U.S. businesses could help both nations in the long run.
