India To Cut Import Duties Amid US Tariff Concerns, Says Finance Minister Sitharaman

India's senior officials have stated that they will continue to reduce import duties as the government seeks to navigate US President Donald Trump's plan to impose reciprocal tariffs on trading partners.

Following extensive cuts to duties on imports ranging from textiles to motorcycles, India's finance minister announced that the process of tariff reform would persist, reported Bloomberg.

"We are building an investor-friendly country, and as a result, the announced duty cuts and rationalisations will continue, and we shall keep doing that," said Nirmala Sitharaman at an event in Mumbai on Monday.

Economists noted that India's higher tariff rates and a $41 billion trade surplus with the US make the country particularly vulnerable if Trump proceeds with reciprocal tariffs. Analysts from Mitsubishi UFJ Financial Group Inc suggested that US tariffs on India could increase from the current 3 per cent to over 15 per cent "if full reciprocity were enforced in theory."

Although it remains unclear how the Trump administration will calculate the tit-for-tat levies, if the US imposes a 20 per cent flat tariff on Indian exports, it could result in a 50 basis points loss to GDP, according to Soumya Kanti Ghosh, Chief Economic Adviser at State Bank of India. A 15 per cent to 20 per cent average increase in tariffs could reduce India's exports to the US by 3-3.5 per cent, he added.

Prime Minister Narendra Modi is eager to prevent further economic slowdown, as growth is already at its lowest pace since the pandemic. To avoid a potential trade war with its largest trading partner, New Delhi has rapidly delivered a series of concessions to the White House on issues central to Trump's agenda. Officials have indicated that this process will continue in the coming months.

Following the meeting between Trump and Modi in Washington last week, both sides agreed to conclude a trade deal by autumn 2025. The Indian leader also stated that the goal is to double bilateral trade to $500 billion by 2030.

India and the US aim to reduce tariffs in the coming months, an Indian official revealed to reporters, requesting anonymity to discuss internal matters. New Delhi will assess the measures the US imposes but will work towards a mutually beneficial trade agreement, the official added.

Indian officials have also been working to counter the perception that the country imposes unreasonable tariffs. At the Mumbai event, Finance Secretary Tuhin Kanta Pandey clarified that India applies tariff rates of under 3 per cent on "30 of the most important imports" and that higher duties are only levied on "a very few products," which "will likely be resolved" during negotiations with the US.