The Narendra Modi government is weighing a host of options to soothe US President Donald Trump who has signalled his resolve to use tariffs as a weapon to force trading partners including India to toe his line as he tries to whittle the massive trade deficit that has smothered America’s manufacturing dream.
A bunch of tariff cuts on American goods are on the table ranging from Harley-Davidson bikes to pork.
US companies may get land to set up manufacturing units, and New Delhi may even sign a mini-trade deal.
The government has sought industry feedback on the implications of Trump’s stated policies. “These inputs will help us evaluate issues and identify offensive interests,” said an official, referring to proactive demands for greater market access in the US.
Trump has threatened reciprocal taxes on Indian exports, aimed at countering what he considers high tariffs on US goods.
India’s commerce ministry is reviewing the mini-trade deal negotiated during Trump’s first term and preparing to respond to any adverse measures. “Negotiations, discussions, retaliation, disputes, or the mini-trade deal — nothing is off or on the table,” an official noted.
India aims to invite US investments and enhance exports, with Trump signalling his intentions to impose steep tariffs on Chinese goods.
The government is looking to leverage US-China trade tensions by attracting investments and businesses seeking to diversify supply chains.
Incentives such as tax benefits and land access in states such as Andhra Pradesh, Gujarat and Tamil Nadu are being considered to entice US companies in sectors such as semiconductors, electronics, renewable energy and aerospace.
Advisers have recommended selective tariff cuts on products with limited domestic demand, such as pork and Harley-Davidson motorcycles, in exchange for benefits such as increased US visas for Indian professionals and investments to support exports.
India is open to increasing imports of energy products such as LNG and defence equipment. However, ongoing discussions on jointly producing fighter jet engines in India have seen limited progress.
China duty
Trump has said he is considering to impose a 10 per cent tariff on Chinese imports starting February 1 to curb the flow of deadly drug fentanyl that Beijing sends to Mexico and Canada.
Fentanyl is a highly addictive synthetic opioid, which, according to the US Drug Enforcement Administration (DEA), presents the deadliest drug threat in the country.