Duty cuts, other India steps to relieve US pain amid Trump's tariff offensive

New Delhi: India's duty cuts on fish hydrolysate for making aquatic feed, specific waste and scrap items, ground installation for satellites, ethernet switches and motorcycles, will provide a boost to US exports.

The budget proposed that the duty on ethernet switches be halved to 10%. The US exported $653.4 million worth of these products to India in FY24. Washington exported $3.09 million of synthetic flavouring essences to India and the duties on them are being cut to 20% from 100%.

US President Donald Trump has accused India of being the "biggest tariff abuser" and "tariff king".


"The duty cuts will impact imports from all countries equally. The policies are not country-specific," said an official.

Premium motorcycles by Harley-Davidson, Triumph and Suzuki, among others, are set to get cheaper with the lowering of basic custom duties on such vehicles by 5-20%, a long-standing demand of the US.

Sending Right Signals
"While Trump has often criticised India's tariff policies, these latest reductions signal a policy shift that could enhance US exports across various sectors. With key tariff cuts on technology, automobiles, industrial inputs, and waste imports, India appears to be taking steps toward facilitating trade even as the global trade environment remains tense," said Ajay Srivastava, founder, Global Trade Research Initiative. India has also lowered the duty on fish hydrolysate for the manufacture of aquatic feed to 5% from 15%, a move which directly impacts American exports.

Trade watchers also said that the announcement to allow 100% foreign direct investment (FDI) in insurance and a five-year Mission for Cotton Productivity to promote extra-long staple cotton varieties, are reforms to be showcased to the US ahead of Prime Minister Narendra Modi's meeting with Trump this month.

US agri trade body Cotton Council International had pushed for the removal of the import duty on certain staple cotton. The US is a key supplier of this cotton to India.

"While negotiations for a trade deal will happen later, India is sending the right signals on the reforms front to the US," said a Delhi-based trade expert.

Another step in that direction is India's decision to amend Civil Liability for Nuclear Damage Act (CLND Act), 2010, experts said. The move will bring cheer to American companies which are keen on setting up atomic plants in India, they said. The Act has been a sticking point between the two countries.

However, experts said that New Delhi needs to exercise caution when it comes to a limited trade deal because the World Trade Organization mandates that free trade pacts with developed countries must have substantial trade coverage.

"The concept of a mini deal idea is legally flawed. That is why countries clarify that they eliminate or reduce tariffs on above 90% items," said another trade expert.