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U.S. Ambassador to India Eric Garcetti has urged New Delhi and Washington to collaborate to reduce tariffs and increase trade.
He pointed out that India has the "highest tariff" among major economies globally.
He emphasized the need for both India and the U.S. to collaborate in lowering tariffs to make trade more "fair and equal."
He stated that the two countries should focus on increasing trade and ensuring that the talent and training available meet the needs of businesses on both sides of the Indo-Pacific.
The US is India's largest trading partner. In FY23, bilateral trade reached a record $128.78 billion, with a trade surplus of $28.30 billion.
India exports to the US include gems, pharmaceuticals, light crude oil, petroleum, electrical and electronics goods, engineering products, apparel, and frozen marine products.
The USA is the 3rd largest investor in India, with cumulative FDI inflows of $62.24 billion from April 2000-September 2023.
He has repeatedly criticized India's tariffs, calling it a “tariff king” and claiming India imposes “tremendously high” tariffs on American products.
He has argued that India’s tariffs are unfair, particularly pointing out the 100% tariffs on certain products like Harley-Davidson motorcycles.
He also indicated that after joining the president's office, he would impose reciprocal tariffs to balance what he believe as unfair trade practices by India.
Trump stated that if India charges high tariffs on U.S. products, the U.S. would respond with matching tariffs on Indian goods to make trade more balanced and fair.
India’s average tariff rate stands at around 17%, which is higher than that of developed countries like Japan, the U.S., and the EU, where rates are between 3% and 5%.
Experts argue that Trump's depiction of India as a "tariff king" ignores the fact that many other countries impose comparable or even higher tariffs to protect their domestic industries. Indian tariffs remain competitive when compared to other developing countries like Brazil and South Korea.
The future of India-US trade relations is dependent on tariffs. To resolve trade differences, both countries should have direct conversations to prioritise tariff reduction and trade expansion. Experts recommend achieving a free trade agreement to address tariff imbalances and promote a fair-trading relationship.
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