India proposes cutting tariff gap with US to less than 4% from 13% to clinch trade deal with Donald Trump: Report

India-US trade deal: India has proposed reducing its tariff differential with the United States to under 4% from the current 13%, seeking exemption from President Donald Trump's existing and future tariff increases, two sources familiar with the negotiations between both nations told Reuters. India and the US are working towards a swift agreement.The United States maintains its position as India's biggest trading partner, with their bilateral trade reaching approximately $129 billion in 2024. The trade relationship currently favours India, which maintains a $45.7 billion surplus with the United States.The proposal represents one of the most significant modifications to trade barriers in India, currently ranked as the world's fifth largest economy. This adjustment would result in a nine percentage point reduction in the average tariff difference between both nations, calculated across all products regardless of trade volumes.Trump declared a 90-day suspension of his planned reciprocal tariffs on global trading partners last month, including a 26% tariff on India, to facilitate trade negotiations. During this pause period, India and several other nations remain subject to a 10% base tariff.Also Read | Elon Musk’s Starlink issued Letter of Intent by Indian government for satcom servicesTrump's administration recently secured its first "breakthrough deal" with Britain. The agreement reduces average British tariffs on American goods whilst maintaining Washington's 10% base tariff on British products, potentially establishing a framework for negotiations with other trading partners.New Delhi has put forward a proposal to eliminate duties on 60% of tariff lines during the initial phase of negotiations, two Indian government officials with direct knowledge of the discussions told Reuters.For goods imported from the United States, India has extended preferential access to approximately 90% of items, including reduced tariff rates, as confirmed by one of the two officials.A team of Indian officials is scheduled to visit the United States later this month to advance the negotiations, according to an official. India has sought tariff exemptions and favourable market access for various export sectors, including gems and jewellery, leather goods, textiles, plastics, chemicals, oilseeds, shrimp and horticultural products like bananas and grapes.Also Read | What does the UK-India FTA mean for India? Top benefits - from cheaper cars, whisky to cheer for Indian professionals"Preferential market access for India would mean better terms of trade for these goods compared to America's other trading partners," the first official said.India has proposed to relax export regulations on valuable US exports to enhance the deal's appeal to Washington, the official said.The proposed relaxations cover aircraft components, premium automobiles, electric vehicles, telecommunications equipment, medical devices, hydrocarbons, alcoholic beverages, fruits, specific chemicals and animal feed.Additionally, India seeks treatment equivalent to major US allies such as Britain, Australia and Japan in strategic technology sectors, including AI, telecommunications, biotechnology, pharmaceuticals and semiconductors.Also Read | Big achievement! India to become 4th largest economy in 2025 overtaking Japan; will be 3rd largest by 2028