India and the United States of America (USA) are two of the world’s largest democracies with significant economic influence. Their trade relationships has often faced friction, primarily over tariffs and market access.
Overview of Trade Volume
- Bilateral trade volume-As of 2024, the total India-US trade in goods and services stands at $ 190 billions, with US being India’s largest trade partner.
- Key Exports/Imports
- India’s exports to the US: Pharmaceuticals, IT services, textiles, gems and jewelry, engineering goods.
- US exports to India: Aerospace, defence equipment, oil and gas electronics and agricultural products.
Tariff Structure
1 India’s Tariff Policies– India has historically maintained higher tariff rates to protect its domestic industries, especially in agricultural, textiles, and electronics. Some key points:
- Average applied tariff-15% (one of the highest among major economies).
- Key protected sectors– Agriculture, dairy, automobiles, consumer electronics.
2 US Tariff Policies- The USA maintains relatively lower tariff rates (2-3%). It has pushed India for greater market access and lower tariffs on American goods, especially in:
- Dairy and poultry
- Medical devices (like stents and implants)
- Information and communication technology (ICT) products.
India-USA Tariff Disputes
The trade relation between India and US, has seen significant growth over the last decade. However tariff-related issues have been a recurring issue. In 2025, several tariff related issues remain unresolved or are in transition.
Background
The roots of India-USA tariff disputes go back several years, particularly during the earlier Trump administration when US adopted a more protectionist trade stance. India was removed from the Generalised System of Preferences (GSP) in 2019, affecting over $ 6 billions worth of Indian exports. India responded by imposing retaliatory tariffs on USA goods such as almonds and apples.
Current Tariff-Related Disputes (2025)
1 Digital Services Taxes and E-Commerce- India’s Equalisation Levy, which imposes a tax on digital services offered by foreign e-commerce companies (like Amazon, Google, Meta) remains a sticking point. The USA views this as discriminatory toward American firms, and although both countries agreed to delay retaliatory tariffs, the issue has not been permanently resolved.
2 Agricultural Products and Market Access– The USA continues to press India for better market access for agricultural products, including:
- Dairy products-US dairy exports are limited by Indian religious and sanitary regulations.
- Apples and almonds– India’s tariffs remain high despite some limited concessions.
3 Tariffs on Medical Devices– The USA has long objected to India’s price caps on imported medical devices like stents and knee implants, many of which are produced by American firms. The Indian government maintains these caps to keep healthcare affordable, but the USA considers them barrier to fair trade.
4 Steel and Aluminium Tariffs– The USA still retains Section 232 tariffs on Indian steel (25%) and aluminium (10%) imports. India wants these duties removed and is seeking treatment similar to the EC and Japan, who received exemptions or quota-based adjustments.
5 Restoration of GSP Benefits– India has repeatedly urged for the reinstatement of GSP privileges, which allowed duty-free exports of select Indian goods to the USA. While there expectations in 2024 for partial restoration, political parties in the USA have delayed any formal decision.
Recent Developments (2025)
- Strategic Trade Dialogue– India and the USA have revived the Trade Policy Forum (TPF), with meetings held in late 2024 and early 2025. While no breakthrough occurred, both sides have committed to resove issues through dialogue.
- Bilateral Agreements– A limited trade package is under negotiations, focusing on specific areas like ICT products, some tariff reductions, and harmonization of standards.
- WTO Disputes– Although many disputes have been de-escalated bilaterally, both countries still have cases pending at World Trade Organisation (WTO), including ones related to solar products and ICT goods.
While tariffs are contentious issue, the broader India-USA economic relationship is expanding. However, protectionist tendencies, domestic political pressures, and disagreements on digital trade rules continue to relate trade dynamics. The India-USA tariff disputes in 2025 reflect a complex relationship balancing strategic partnership with economic self-interest.
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Anil Malik
Mumbai, India
16th July 2025