In response to US President Donald Trump's threat of imposing tariffs from April 2, India's Ministry of External Affairs (MEA) said both US and India were negotiating a "mutually beneficial, multi-sector bilateral trade agreement."
India's Commerce and Industry Minister Piyush Goyal held the first round of negotiations with his US counterparts on a prospective free trade agreement (FTA) during a visit to Washington on 4-6 March, MEA spokesperson Randhir Jaiswal told a briefing in New Delhi on Friday.
The US sought a "zero-to-zero" tariff regime on almost all product lines between the two countries, barring the exception of agricultural trade, the report in CNBC-TV18 stated.
The India-US trade negotiations took place against the backdrop of Trump once again criticising India for imposing higher tariffs on American goods during an address to a joint sitting of US Congress this week.
The US is India's largest export market and the biggest trading partner, with Indian exports of gems and jewellery, refined petroleum products, pharmaceuticals and machinery parts leading the Indian inventory.
The Indian government should and will "vouch for the interests" of domestic players, commenting on how India was handling Trump's reciprocal tariff threats, Professor Ashwani Mahajan, the co-convenor of economic advocacy group Swadeshi Jagran Manch (SJM) told Sputnik India.
The point that for some time now, India has been of the view that "bilateral trading pacts are much better than multilateral frameworks", he underscored.
"For instance, World Trade Organisation's (WTO) most-favoured nation (MFN) status calls for affording this advantage to all countries under the non-discriminatory trading regime, which might not always be in our interest," Mahajan explained.
The expert noted that since Trump took office, India had already reduced duties on high-end motorcycles, cars, smartphone parts as well as American bourbon. However, these moves are unlikely to have a significant impact on India, as only a small, affluent section of Indian society could afford these products, he suggested.
At the same time, Trump's reciprocal tariff threat could put the entire WTO framework in danger, adding that the US President saw tariffs as a "legitimate tool of public policy", Mahajan warned.
"Imposing unilateral tariffs is very much against the WTO rules and framework. Secondly, other countries could also take a cue from Trump's trade policy and levy similar tariff barriers," he said, a point which other industry experts have also made to Sputnik India in previous interviews.
With regards to India's plan to increase its energy imports from the US from $15 billion (last year) to $25 billion, the SJM co-convenor commented that India would be mindful that it sources energy from the most affordable source on the market.
The Indian economic activist stated that it was in the sphere of agriculture that India should exercise the maximum caution, given the fact that the sector employed almost 50% of the Indian workforce.
"I don't believe India should cede to US demands to open up our market to American agricultural products. The US gives much more subsidies than India to its farmers. So, the playing field is not level to begin with," Mahajan said.
He stressed that defending the interest of the Indian farmer was of "paramount importance" for Prime Minister Modi, describing the government's position as "non-negotiable" in the sector.
Trade in agriculture has been one of stickiest issues between India and the US. Just last year, the US and India resolved the last outstanding dispute at the WTO, resulting in increased market access opportunities for American frozen duck, frozen turkey, as well as fresh, frozen, dried, and processed blueberries and cranberries in the Indian market. This has been highlighted in the Trump administration's 2025 Trade Policy Agenda.
Trump has been seeking further access for American agricultural products across the world. It remains unclear how Indian agricultural exports to the US would be impacted from next month onwards until a trade deal is signed.
“I love the farmer,” Trump told the US Congress sitting this week, as he urged American producers to bear with him amid ongoing tariff wars.
Mahajan also suggested that India should continue to bolster its domestic manufacturing capabilities under the Atmanirbhar Bharat policy to reduce import reliance, further improve the investment climate through schemes such as Production-Linked Incentives (PLIs) to attract global and Indian players, particularly in high-tech sectors such as semi-conductors and renewable supply chains among others.
Meanwhile, an estimate by Citi Research suggests that Indian exporters could lose up to $7 billion in revenue if Trump goes ahead with the threat of imposing reciprocal tariffs.
This week, a report by ratings agency CRISIL stated that Indian exports of gems and jewellery, pharmaceuticals, readymade garments (RMGs), smartphones and solar photovoltaic (PV) modules to the US were at maximum risk due to proposed US tariffs.
India's exports of steel and aluminium to the US, which stood at 2% and 6% in the first nine months of last fiscal, would also be impacted after 25% tariffs on these products kick in, the CRISIL report said.
In sectors such as readymade garments, the US tariffs could increase competition for Indian exports in other geographies, where other major players like China and Bangladesh could look to expand market access due to Trump's tariff threats.