Tariffs to be focus of PM Modi's US trip

Indian Prime Minister Narendra Modi begins a two-day visit to the United States on Wednesday, with reports suggesting that he has lined up some tariff concessions as he meets US President Donald Trump in Washington and tries to avert a potential trade war.

The primary focus during the meeting between Modi and Trump will be on reducing import tariffs to boost US exports to India, Indian trade experts said.

"We don't want to give anybody any signal that we would like to be protectionist," India's Finance Secretary Tuhin Kanta Pandey said on Feb 1 after the federal budget was unveiled in Parliament that day.

The official made the remark after Trump sparked global concerns with sweeping tariff proposals against Canada, Mexico and China, and said he may also impose levies against other nations and regions.

India's "enormously high" tariffs block imports, US news channel CNBC quoted Kevin Hassett, Trump's top economic adviser, as saying. Hassett made the comment ahead of Modi's scheduled visit to Washington. Trump, advocating reciprocal tariffs, previously criticized India as a "big abuser "of trade, according to CNBC.

India may announce a cut in import duties on some US products, said Biswajit Dhar, a former professor at Jawaharlal Nehru University, or JNU, New Delhi.

In the federal budget, India reduced import duties on motorcycles, cutting tariffs on heavy bikes with engines above 1,600 cc from 50 percent to 30 percent and smaller ones from 50 percent to 40 percent.

The move to reduce import duty on heavy bikes is an attempt to avoid a tariff threat and facilitate the smooth entry of US-made Harley-Davidson motorcycles into India, Dhar said, adding New Delhi wanted to convey a message to Trump that it wants to accommodate his interests.

Dhar said it is a different matter whether Trump is going to be convinced because he has a long list of products on which he wants tariffs to be reduced.

"Canada and Mexico are the biggest trading partners of the US. If he can act against them, he could easily target anyone," he said.

According to Indian official data, India had a trade surplus of $35.3 billion with the US in the fiscal year ending March 2024.

India exports a wide variety of goods to the US, including textiles, pharmaceuticals, engineering goods, petroleum products, machinery and cut diamonds. Bilateral trade between the two countries totaled almost $120 billion in 2023.

Tariff reduction announced in the budget on products such as motorcycles will benefit US exports, said Ajay Srivastava, founder of the Delhi-based think tank Global Trade Research Initiative, or GTRI.

Amid Trump's repeated criticism of India as a trade abuser, India's budget introduced significant tax cuts on multiple products, GTRI said in a report. "Whether these reductions will alter Washington's view of India's trade practices … remains to be seen," it said.

More cuts

It is possible that after the Modi-Trump meeting, India may announce more tariff concessions to boost US exports to India, according to Indian economist Abhirup Sarkar.

Swaran Singh, a professor of international relations at JNU, noted that so far India has been spared from Trump's tariffs, adding the Modi-Trump meeting scheduled on Thursday "is expected to further fine-tune bilateral irritants".

Karori Singh, former director and emeritus fellow of the South Asia Studies Centre at India's University of Rajasthan, said the entire world has apprehensions about Trump's moves.

In his announcement on Monday, Trump unveiled 25 percent blanket tariffs on steel and aluminum imports and ended duty-free quotas, exemptions and exclusions.

The move will increase prices in the US and adversely affect exports by some countries, experts say.

"Such measures may cast their shadow over Modi-Trump talks as well," Karori Singh said. "It is, therefore, imperative that countries across the globe take joint steps to resist these protectionist measures which are likely to adversely affect the flow and fair practice in international trade."

Expressing "deep concern" over the latest US steel tariffs, Indian Steel Association President Naveen Jindal said in a statement on Monday that Washington's move will further disrupt global trade and intensify challenges for the steel industry.

Contact the writers at vivienxu@chinadailyapac.com

Aparajit Chakraborty is a freelance journalist for China Daily.