Exclusive | US puts pressure on India to ease non-tariff barriers amid reciprocal tariff threats

The United States is pushing India to relax non-tariff barriers, including local content requirements, differential tax treatment, and quality control orders. Despite mounting pressure from the White House, India may not respond with reciprocal tariffs immediately but could offer increased purchases of US oil and defence equipment to delay further tariff action, according to sources.Assistant USTR Brendan Lynch raises US concerns

Assistant US Trade Representative (USTR) Brendan Lynch has raised concerns over India’s non-tariff barriers alongside calls for tariff reductions. The US has presented India with a comprehensive list of barriers where it seeks concessions, focusing on local content requirements and data localisation policies and ensuring a level playing field for US and Indian banks.
Additionally, the US has flagged New Delhi’s quality control orders, arguing they restrict market access for American companies.The US has also expressed concerns about India’s agricultural subsidies and the Minimum Support Price (MSP) regime. While India is considering offering some concessions on non-tariff barriers as part of the Bilateral Trade Agreement (BTA) negotiations, US reciprocal tariffs are expected to proceed regardless of the progress in these talks.

New Delhi unlikely to retaliate with immediate tariffs

In response, India may attempt to delay the imposition of US tariffs by increasing imports of oil, gas, and defence platforms. However, sources indicate that India is unlikely to retaliate with immediate tariffs.

The broader trade negotiations reflect the US’s growing reliance on tariffs and sanctions as strategic tools. Concerns remain about whether any agreement with the current US administration would be honoured long-term, especially given America’s recent withdrawal from international commitments such as the Paris Agreement.

India is also firm on protecting its domestic industries under the Production-Linked Incentive (PLI) scheme and remains unwilling to open sensitive sectors like wheat, maize, and dairy to US companies.

What experts have to say

Ajay Srivastava, Founder of the Global Trade Research Initiative (GTRI), commented: “GTRI has recommended a ‘zero to zero’ tariff approach on 90% of industrial goods. This implies India should eliminate tariffs on 90% of tariff lines if the US does the same. This strategy would cover over 90% of India-US bilateral merchandise trade. India’s recent unilateral reduction of tariffs on US products like whiskey and motorcycles has gone unacknowledged by the US side. Talks about easing regulations for US giants like Tesla, Starlink, Amazon, and American pharma firms raise serious concerns around national security, intellectual property rights (IPR), and the long-term impact on Indian businesses.”