India and the US are gearing up for the second round of face-to-face talks on the agreement in Washington, with the Indian side led by its chief negotiator Rajesh Agarwal.
“This issue is part of India’s agenda note for the talks,” said one of the two persons cited above.
These duties, in effect since 12 March, are part of a broader ‘reciprocal tariff’ hike by the US. These also include a 25% tariff on automobiles that is effective from 3 April.
“India sees the BTA as a key platform to resolve such trade irritants and ensure long-term predictability in bilateral commerce,” said the second person.
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“As per trade talk protocols, usually all tariffs—regardless of the product—are part of the BTA talks. India will also push to bring duties on steel and aluminium within the scope of these discussions,” this person said.
This assumes significance as India and the US are key trading partners, with bilateral trade increasing from $51.6 billion in fiscal year 2021 (FY21) to $86.51 billion in FY25. The US is India’s largest trading partner, while India is the US’s seventh largest.
Bilateral trade grew 11.6% in FY25, increasing from $77.52 billion in FY24 to $86.51 billion, according to commerce ministry data. However, imports from the US rose by a modest 7.42%, from $42.20 billion to $45.33 billion, during the fiscal year that ended on 31 March. As a result, India registered a trade surplus of $41.18 billion with the US in FY25, up from $35.32 billion the previous year—an increase of 16.6%.
Contentious issues
The Indian team will hold talks with US negotiators from 23-25 April with a focus on resolving key outstanding issues such as digital tax regulations, tariff reductions and non-tariff barriers.
New Delhi has also raised concerns about a US demand for market access for its dairy products, saying feeding practices in the US differ significantly from those in India, as reported by Mint on Monday.
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In the US, cattle are fed with ‘stall-based’ feed, which includes animal-based protein sources—a practice that raises concerns in India.
Queries emailed to spokespersons of the ministries of commerce, external affairs and US embassy remained unanswered till press time.
“The government should move forward not just to eliminate the reciprocal tariffs, but also to seek better market access in other sectors—particularly textiles, apparel, and other labour-intensive industries. At the same time, India will have to remain alert to protect the interests of its farmers,” said Abhijit Das, an international trade expert and former head of the Centre for WTO Studies, New Delhi.
However, an industry leader said the additional 25% duty—on top of existing duty—on steel is impacting Indian manufacturing, even as many shipments are already in transit.
“The steel industry has suggested adopting a zero-for-zero tariff on steel and aluminium, which would create a level playing field. Indian steelmakers are open to agreeing to such a tariff structure,” said Pankaj Chhada, chairman of the Engineering Export Promotion Council.
However, trade research body Global Trade Research Initiative (GTRI) believes the impact of the Trump administration’s 25% tariffs on iron, steel and aluminium products on India is likely to be limited.
A GTRI report noted that the US tariffs on India’s automobile sector would also be minimal, and some segments could even see opportunities.
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GTRI founder Ajay Srivastava cautioned that if India decides to reduce tariffs on passenger car imports to placate the US, it could prove counterproductive. He cited Australia’s experience in the late 1980s, when its automobile manufacturing industry collapsed after the country slashed auto import tariffs from 45% to 5%.
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