U.S. President Donald Trump announced on Thursday that India has proposed a landmark trade agreement granting the United States duty-free access on a majority of its exports, marking a potential turning point in bilateral economic relations long marred by high Indian import levies and U.S. trade barriers. Speaking to business leaders in Doha, Trump said New Delhi had offered to set tariffs to zero on roughly 60 percent of tariff lines and extend preferential access on nearly 90 percent of the goods India buys from America, a move he characterized as unprecedented and mutually beneficial.

“It is very hard to sell in India,” Trump told attendees at an international investment forum in the Qatari capital. “They came to us and said, ‘We’ll literally charge you no tariffs.’ That’s a huge deal.” According to the president, the proposal comes as part of negotiations conducted during the 90-day tariff truce he announced in early April, which suspended further U.S. tariff increases on major partners while the two sides explore a comprehensive pact.

A Pause in Hostilities

The 90-day window offers both Washington and New Delhi an opportunity to recalibrate their trade relationship after months of escalating threats and counter-measures. In March, the Trump administration imposed a 27 percent “reciprocal” tariff on a broad slate of Indian goods—most notably agricultural products and consumer items—in retaliation for India’s high average import duty of around 12 percent. India had threatened to respond in kind, but instead opted for a diplomatic approach, opening its markets in exchange for U.S. tariff relief.

Under the emerging framework, India would eliminate duties on items including medical devices, agricultural commodities, information-technology products and select luxury goods. In return, the United States is understood to be considering reductions or the eventual removal of its own levies on key Indian exports such as textiles, gems and jewellery, and certain chemicals. Trump said that, once finalized, the deal would bring down New Delhi’s average tariff rate from roughly 13 percent to below 4 percent.

For Trump, the announcement serves several objectives. It underlines his administration’s commitment to securing “reciprocal” trade terms after years of what he called “one-sided” agreements. It offers a potential win ahead of the U.S. presidential election, showcasing his ability to clinch high-profile deals. And it underscores a strategic pivot toward deepening economic ties with India as America seeks to diversify supply chains away from China.

In private discussions, the president has repeatedly pressed India to open its markets—pointing to sectors where U.S. firms believe they hold competitive advantages. Agriculture remains at the top of the list: U.S. soybean, almond and pork producers see a duty-free market in India as a vast new opportunity. Similarly, large aircraft makers and medical-equipment manufacturers have lobbied for lower duties in order to compete against European rivals.

Yet the speed of India’s commitment to zero tariffs on so many lines has surprised even seasoned trade negotiators. Officials in New Delhi caution that constitutional and fiscal constraints limit how quickly rates can be permanently slashed. Some sectors—particularly automobiles, dairy and sugar—remain politically sensitive due to domestic stakeholder opposition. Nonetheless, Modi’s government appears ready to commit to a phased approach, with an initial tranche of duty removals followed by a review after one year to cover additional lines.

India’s Strategic Balancing Act

India, the world’s fifth-largest economy, has long guarded its ability to impose high import duties as a means of protecting nascent industries, preserving fiscal revenues and safeguarding farmers’ incomes. Its average applied tariff of around 12 percent compares with the United States’ 2.2 percent, and nearly 40 percent of India’s tariff lines carry duties above 10 percent. In recent months, New Delhi has incrementally reduced levies on motorcycles, medical equipment and select electronics, partly to address U.S. complaints.

But the broader offer of “zero-for-zero” tariffs constitutes a major departure from India’s historical stance. Economists suggest that making such commitments possible will require compensatory tax-revenue measures, such as limiting exemptions in its goods-and-services tax (GST) framework and boosting compliance. It will also demand stronger safeguards against a flood of cheap imports, potentially through anti-dumping duties and swift review mechanisms.

Prime Minister Narendra Modi, who has championed India as a global manufacturing and technology hub, has made U.S. trade talks a top priority. In February, he became the first Indian leader in decades to visit Washington early in his term, elevating the trade agenda alongside defence and climate cooperation. Since then, Indian negotiators have signalled flexibility on tariffs in return for guaranteed, predictable access to American markets—mirroring the kind of “zero-for-zero” deals the U.S. has signed with other partners.

Investor reaction was immediate: India’s benchmark stock indices jumped more than 1.5 percent following Trump’s comments, as traders priced in a reduced risk of retaliatory duties and broader export opportunities. U.S. agricultural firms, meanwhile, welcomed the prospect of duty-free shipments to one of the fastest-growing food markets in the world. But industry groups also cautioned that the devil lies in the details.

In Delhi, the commerce ministry is finalizing language for a memorandum of understanding that would underpin the tariff reductions. Sources indicate the pact may include an initial six-month window before the first round of cuts, allowing India time to adjust its tariff schedules and clear necessary Gujarat and Maharashtra state-level approvals. U.S. negotiators, for their part, are weighing whether to grant immediate relief from the 27 percent reciprocal levy on Indian imports, as a gesture of goodwill.

Trouble spots remain. The Indian government has insisted on special treatment for key sectors—pharmaceuticals, steel and agricultural commodities—to shield domestic producers from import surges. Meanwhile, U.S. lawmakers are pressing for stringent rules of origin to ensure that only genuinely U.S.-made goods enjoy zero tariffs. There are also broader geopolitical implications, as a deeper economic partnership with India could reshape trade alignments in Asia and influence China’s calculus.

If realized, a U.S.-India deal featuring no tariffs on the majority of traded goods would be among the most ambitious to date, rivaling agreements between the U.S. and smaller economies. It would further President Trump’s long-standing pledge to rebalance trade in favor of American producers, while bolstering Modi’s vision of India as a preferred manufacturing base.

Critics caution that eliminating tariffs alone will not address non-tariff barriers—such as complex customs procedures, regulatory approvals and data-localization requirements—that often pose even greater challenges to cross-border commerce. Trade analysts also note that the economic gains depend on complementary measures: infrastructure upgrades in India, streamlined logistics, banking reforms and transparency initiatives.

For now, both sides appear motivated to finalize the deal within the 90-day tariff pause. India’s trade minister is slated to lead a delegation to Washington in late May, aiming to iron out remaining differences and seal the agreement ahead of a potential summit between Trump and Modi. Trump told reporters he expects negotiations to “move quickly” and hinted that an official announcement could come as early as June.

As negotiators prepare to meet in the United States, the core question is whether India can commit to binding, legally enforceable tariff cuts without triggering domestic pushback, and whether the U.S. will reciprocate by shelving its punitive levies. The outcome will resonate far beyond bilateral commerce: it could redefine the architecture of global trade, embolden other emerging economies to seek similar “zero-for-zero” deals, and influence the trajectory of globalization in an era of heightened economic nationalism.

President Trump’s declaration that India is willing to “literally charge us no tariffs” has generated optimism among exporters and investors. But turning that promise into a durable, equitable pact will require meticulous negotiation, cross-sector compromise and a shared commitment to open markets. As both capitals stake their reputations on the outcome, the world will be watching whether this bold offer heralds a new chapter in U.S.-India economic partnership—or remains a tantalizing but elusive aspiration.

(Adapted from Reuters.com)

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