India Softens Tariff Stance, Offers US Select Sector Relief With Import Limits

India is open to offering zero tariffs to the United States on “select goods” such as steel, auto components, and pharmaceuticals—but only up to a certain volume of imports, in order to mitigate risk of trade imbalance between the two nations, people privy to the trade talks told NDTV Profit.

“For engineering goods, zero-for-zero can happen without any limits. The tariff rate quota (TRQ) is for agricultural products. We don't want TRQs in industrial goods, but the US may want it,” said Pankaj Chadha, chairman of the Engineering Exports Promotion Council.

The proposal, still under negotiation, ties zero tariffs to a capped quantity of imports. Beyond that threshold, regular duties would apply. India's offer is contingent on reciprocal concessions from the US side, aimed at easing market access for Indian exports.

This quota-based approach allows India to liberalise selectively, protecting its domestic sectors from an import surge while responding to long-standing US concerns over market access.

The inclusion of steel and auto components—both hit by steep US tariffs—signals India's effort to relieve pressure on these industries. Pharmaceuticals, where India has global strengths, are also on the table to push for balanced trade.

India's trade surplus with the US stood at $41.18 billion in fiscal 2025, a key factor driving the push for more calibrated trade terms.

Separately, India may consider easing Quality Control Orders (QCOs) as part of the broader deal. “QCO is a sensitive item, but surely can be relaxed,” Chadha added.

The discussions are part of a broader effort to conclude the first phase of a Bilateral Trade Agreement (BTA) by October 2025. While India had previously resisted a zero-tariff framework—arguing it favors developed economies—it now sees targeted sectoral agreements, developed in consultation with export councils, as a pragmatic way forward.