India has made bold moves vis-à-vis the United States in slave trade negotiations—offering a bilateral arrangement that demands zero customs on imports of auto parts, steel, and pharmaceuticals, according to sources conversant in matters of the talks.
The idea behind it was put forward by the Indian trade officials who undertook a trip to Washington in late April and is aimed at establishing reciprocal duty-free thresholds for some industrial goods. On crossing that threshold, normal import duties apply, with a flexible approach that reduces friction in trading.
The goal? Strike an early bilateral trade agreement before the end of the 90-day pause on President Donald Trump’s escalating tariff policy. With Trump hinting at new deals as early as this week, India is positioning itself among the leading contenders — alongside South Korea and Japan — to lock in favorable terms.
“We are comfortable with the zero-for-zero tariff offer as Indian products are extremely price competitive,” said Pankaj Chadha, chairman of the Engineering Exports Promotion Council. “I don’t see any impact if the duties are slashed — as long as it’s reciprocal.”
What’s on the Table?
The zero-tariff offer focuses on steel, auto components, and pharmaceutical goods — three areas where India is already a major exporter to the US. In 2024–25 alone, India exported:
- $10.5 billion worth of pharmaceuticals
- $19.1 billion in engineering goods, including machinery and automotive components
Indian officials have reportedly consulted export organizations who believe the move would not harm domestic industries, thanks to India’s price competitiveness.
Meanwhile, the US side is pushing for clarity on India’s Quality Control Orders (QCOs) — regulations that require all goods (local and foreign) to meet specific standards before entering the Indian market. Washington considers these QCOs non-tariff trade barriers, and wants revisions or transparency improvements.
“India’s QCO framework needs to be revisited. These rules are a legitimate concern for US exporters,” said one unnamed source close to the negotiations.
The Bigger Picture
This potential deal comes as the US economy slows under pressure from global tariff uncertainties. Trump’s aggressive trade tactics — including 145% tariffs on Chinese goods and new 100% duties on foreign-made films — have left many trade partners scrambling for exemptions.
For India, sealing a limited deal with the US before the 90-day tariff pause expires could be both a diplomatic win and an economic safeguard.
If accepted, the agreement could create preferential access for US steel and auto parts exporters, while giving India an edge in maintaining its strong pharmaceutical and engineering exports to American markets.
