India will decide on how exactly it will react to reciprocal tariffs planned by US President Donald Trump once these are rolled out and there is greater clarity on the impact, sources have said.
“We know the contours of the reciprocal tariff bill (of the US), but what shape it will take once it becomes an act, we are not clear. We will take calls once that act comes into force…There will be inputs from industry and all line Ministries and Departments,” an official tracking the matter told businessline.
It is only once the picture on the reciprocal tariffs is more clear can India decide things like complaining to the World Trade Organization or imposing retaliatory tariffs on US imports, like it did in 2023, the source added.
Proposed BTA
New Delhi is hopeful that the proposed India-US bilateral trade agreement (BTA), that will be soon negotiated, may be able to take care of concerns such as the 25 per cent tariffs imposed by the US on steel and aluminium as well as reciprocal tariffs on other items that may be levied, the source said.
“There may be a tariff war between US and some countries once the reciprocal tariffs roll out and India may actually gain from it. Also when the BTA negotiations start, India can take up all its concerns, including tariffs imposed by the US on steel and aluminium, for a satisfactory solution,” the source pointed out.
Trump signed an order on February 13 for a ‘fair and reciprocal plan’ of imposing tariffs on trade partners that will seek to correct “longstanding imbalances” in international trade. He said that India maintained one of the highest tariffs. The same day Trump and Prime Minister Narendra Modi decided to set a target of doubling bilateral trade to $500 billion by 2030 and work on a bilateral trade agreement (BTA) with a year-end deadline for the first tranche.
A top government official noted that at least a couple of weeks would be needed to decide the level of ambition in the first tranche of the agreement and what the nature of the agreement would be. “The two sides will need to sit together and try to finalise the broad contours,” Additional Secretary in the Department of Commerce Rajesh Agrawal said.
In fact, a BTA may not be the same as a Free Trade Agreement, the source said.
During the first term of US President Donald Trump, India and the US could not finalise a mini trade deal.