Srivastava said India has already granted similar concessions in its Free Trade Agreements (FTAs) with ASEAN, Japan, Korea, Australia, and the EFTA.
“We should immediately draw a list of such items which we can offer to the US,” Srivastava said. “It’s not very difficult for India to identify such tariff lines. If Trump accepts this, it’s fine. If he doesn’t, then we can explore other options,” he stated in an interview with CNBC-TV18.
Srivastava also downplayed concerns about potential US auto tariffs negatively impacting India’s automobile industry. In response to Trump’s criticism of India’s high automobile tariffs, Srivastava noted that India’s passenger car exports to the US are already declining, falling below $13 million in financial year 2024 and projected to drop further to under $9 million next year.
“We don’t care much about passenger car exports to the US,” he stated. “Even if the US imposes higher tariffs, our auto industry will not feel any significant impact in terms of revenue or turnover.”
Regarding Trump’s broader tariff strategy, Srivastava suggested that a product-level reciprocal tariff approach would not be feasible. “If the US targets specific products like cars, then India will respond by addressing different products where it has leverage. Reciprocity at the product level will not work,” he explained.
Meanwhile, Amita Batra, a professor at Jawaharlal Nehru University (JNU), pointed out that Trump’s tariff strategy remains unclear, which adds uncertainty to the ongoing trade deal negotiations between India and the US.
“The White House memo last month listed five conditions for determining reciprocal tariffs, including tariffs, non-tariff barriers, subsidies, and even currency policies,” Batra noted. “As of now, it’s difficult to ascertain which products or sectors will be affected. There is a lack of clarity on reciprocal tariffs, which leaves many questions unanswered.”
Edited Excerpts from the Discussion:
Q: Regarding automobile tariffs, Donald Trump singled out India’s auto tariffs, saying that India charges more than 100% tariffs on automobiles. This means discussing tariffs in the bilateral trade agreement negotiations will be tough. India says we can give you a 15% concessional import duty, but then you must commit to manufacturing in India. However, this isn’t in line with the vision of Make in America under Donald Trump. Can India give that duty concession on cars and automobiles to America without seeking a commitment to manufacturing?
Srivastava: All the countries have some outlier tariffs. India has higher tariffs on automobiles, wine, and spirits. The US also has higher tariffs on tobacco. Our highest tariffs are 150% and their highest tariffs are 350%.
Now, returning to the auto sector, our exports of passenger cars to the US are declining. In the financial year 2024, the exports were less than $13 million, and this fiscal, they will be under $8-9 million. So, we don’t care much about the passenger cars if they impose higher tariffs. We should not care. Our auto industry may not feel any dent in their revenue or turnover.
Q: You are saying there will not be a major dent in the domestic market if India reduces import duty on imported cars. Is that correct?
Srivastava: No, no. I have not talked about reducing the duties on imported cars. That deal has to be on the reciprocal basis. Is he talking about the cars? Then we’ll talk about their products also. If he’s talking about cars, it won’t work for him. They export, for example, apples to us, and we charge 50% for apples. They say you are charging 50% on apples, we will also charge 50% on apples from you. Please go ahead because we don’t export apples.
So, they export something else to us, we export very different things to them. So, reciprocal tariffs at the product level, for example, at the automobile level, will not work. That’s why you may have seen that he’s imposing 25%, 15%, 10% big tariffs. So, we have yet to see how it unfolds. So far, even Trump is not clear, his team is not clear how they will impose tariffs at the sector level or the country level. So far, it’s not clear.
Q: When discussing a trade deal with the United States, Piyush Goyal is in the US right now. Over there, Donald Trump again spoke about India as a very high tariff jurisdiction. This does put a lot of pressure. India hopes to agree on the trade deal to avoid those reciprocal tariffs. Do you think that threat can be averted? Or is it inevitable that we’ll be hit with reciprocal tariffs come April 2 like all other nations?
Batra: I’d like to say two things in this context: one is what President Trump implies by reciprocal tariffs. In its memo last month, the White House specified five conditions for defining and calculating or evaluating these reciprocal tariffs. This includes almost everything, not just tariffs but non-tariff barriers, subsidies, taxes, and any currency exchange rate policies they deem currency manipulation. So, they have a lot of leverage in terms of determining what the basis of these reciprocal tariffs is going to be. So, as of now, it’s very difficult for us to ascertain what will be taxed, what the products will be taxed, what sectors, and whether it will be product-specific or sector-specific. I don’t think we know any of this at this time. That’s one part of it. Clarity on reciprocal tariffs is not available—many unanswered questions remain on this particular issue.
Q: Which areas can India offer some concessions to the United States? Are there some low-hanging fruit like bourbon whiskey that you feel India could put on the table?
Srivastava: Of course, we can offer almost all industrial goods, more than 90%, to the US, and India should immediately draw a list of such items that we can offer to the US. We should offer them much before April 2, when they will impose the reciprocal tariff, and it’s not very difficult for India to identify such tariff lines.
We have many FTAs, for example, with ASEAN, Japan, Korea, Australia and now with EFTA and other countries where we already offer zero tariffs to these countries. So, we select tariff lines from whatever we have given at zero duties to these countries, apply some US level sensitivity, offer it straight without negotiations to the US, and say this is India’s offer, zero for zero. We are offering zero tariffs to you on most of the industrial products, and subject to you also offering the same thing to us. If Trump accepts this, it’s fine. If he doesn’t accept, we can consider other options.
Watch the accompanying video for the entire discussion.
