'Zero-For-Zero' Plan May Help Counter US Reciprocal Tariff Threat: GTRI

A 'zero-for-zero' tariff strategy proposed by India to the US could protect domestic industries, amid US President Donald Trump's reciprocal tariff threats.

"India could make an advance tariff offer to the US and drop its FTA plan. Since the US is India's largest trading partner, India must act to minimise any negative impact," said Ajay Srivastava, a former Indian trade service officer, who now runs the Global Trade Research Initiative or GTRI, a think tank based out of New Delhi.

"For this, India needs to identify tariff lines, where India can eliminate tariffs for US imports, without harming domestic industries and agriculture. We may exclude most agriculture lines from this list. To prepare such list, India can refer to its FTA tariff offers to Japan, Korea, and ASEAN as a starting point," he said.

While Trump has announced intentions of implementing reciprocal tariffs, the actual enforcement would only be in April. Therefore, India can share where it can eliminate import duties on certain American products in exchange for similar concessions before April.

"If the US accepts, reciprocal tariff may be very low or near zero for India," Srivastava added. Through this, India can eliminate tariffs on about 90% of industrial goods to prevent aggressive tariff hikes.

In a report, Srivastava argued that though the zero-for-zero strategy violates WTO's Most Favoured Nation rules, it is less harmful compared to negotiating a full FTA.

"[A full FTA] could force India to make difficult concessions, such as opening government procurement to US firms, reducing agriculture subsidies, weakening patent protections, and removing data flow restrictions — all of which India is not prepared to accept," he added.