The United States is urging India to reduce its tariffs and increase purchases of U.S. defence products as part of a proposed bilateral trade agreement. U.S. Commerce Secretary Howard Lutnick affirmed that India's high tariffs, among the highest globally, necessitate a reassessment of its "special relationship" with the U.S.

He suggested that India should shift its defence procurement away from Russia and towards advanced U.S. products, highlighting the potential for significant military sales, including the eventual provision of F-35 fighter jets.

The U.S. aims to finalise a "grand" bilateral deal with India by the fall of 2025, with a long-term goal of achieving bilateral trade worth $500 billion by 2030.

However, this process is complicated by U.S. President Donald Trump's announcement of reciprocal tariffs on India, set to take effect on April 2, 2025. These tariffs are part of a broader strategy to align U.S. import duties with those imposed by other nations, addressing what Trump views as unfair trade practices.

In sensitive sectors like agriculture, the U.S. proposes a trade agreement with quotas and limitations to ensure mutual benefits. India has historically protected its agricultural sector to support small farmers, but the U.S. believes this market must be opened up for American firms.

The U.S. has asked India to remove tariffs on nearly all goods except agricultural products, which could mean India giving up significant trade protections without receiving concessions in return.

The U.S. is advocating for a broad-based trade agreement that considers all aspects of trade, rather than focusing on individual products.

What Specific Defence Products Is The U.S. Pushing India To Buy

The United States is pushing India to purchase several specific defence products as part of its efforts to strengthen bilateral defence ties. Some of the key defence products and initiatives include:

F-35 Fighter Jets: The U.S. plans to eventually provide F-35 fighter jets to India, a significant step in deepening defence cooperation.

MQ-9B Predator Drones: India has already signed a $3.3 billion deal for 31 weaponized MQ-9B Predator drones, marking a major defence procurement from the U.S.

General Electric F414-INS6 Aero-Engines: The U.S. is negotiating co-production of these engines with Hindustan Aeronautics for India's TEJAS MK-2 fighter jets, valued at around $1.5 billion.

Stryker Armoured Infantry Combat Vehicles: The U.S. hopes to jointly manufacture these vehicles with India, as part of its broader push for defence collaboration.

MH-60R Seahawk Helicopters: India has already inducted 24 of these helicopters as part of a $2.13 billion contract, with discussions ongoing for additional purchases.

These defence deals are part of a broader strategy to enhance U.S.-India defence cooperation and reduce India's reliance on Russian military imports.

How Does The U.S. Plan To Address India's Concerns About Tariffs

The U.S. plans to address India's concerns about tariffs through a combination of diplomatic engagement and trade negotiations. Here are some key strategies:

The U.S. and India are working towards a multi-sector BTA aimed at reducing tariff and non-tariff barriers, increasing market access, and deepening supply chain integration between the two countries. This agreement is intended to be mutually beneficial, allowing both nations to strengthen their trade ties.

The U.S. has asked India to lower its tariffs significantly, suggesting that India should reduce tariffs to zero or minimal levels across most sectors, except for agriculture. In response, India is considering tariff cuts on key U.S. imports to counter the U.S. reciprocal tariffs set to begin on April 2, 2025.

For sensitive sectors like agriculture, the U.S. proposes implementing quotas and limitations to ensure mutual benefits. This approach would involve setting specific limits on certain products to balance trade interests.

High-level diplomatic meetings, such as those between Indian Commerce Minister Piyush Goyal and U.S. officials, are crucial in advancing trade discussions and finding solutions to tariff disputes.

India has adopted a conciliatory approach by refraining from retaliatory measures against the U.S., instead focusing on proactive trade negotiations and diplomatic engagement.

This strategy may encourage the U.S. to favour nuanced agreements over broad tariffs, benefiting both nations.

Despite these challenges, both countries are engaged in ongoing discussions to advance the trade agreement. Indian Commerce Minister Piyush Goyal recently met with U.S. officials to explore ways to strengthen trade ties and reduce tariff barriers.

Agencies