NEW DELHI:
The United States has urged India to increase its purchases of American defense products, reduce its reliance on Russian military equipment, and lower tariffs on US goods as key steps toward finalizing a “grand” bilateral trade agreement. US Commerce Secretary Howard Lutnick emphasized these points during an interview with *India Today* on Friday, speaking from Washington.
Lutnick highlighted that India’s high import tariffs, among the steepest globally, necessitate a reevaluation of its “special relationship” with the US. His comments come just weeks before President Donald Trump is set to impose reciprocal tariffs on several trading partners, including India, raising concerns among Indian exporters in industries such as automobiles and electronics.
“We would like to focus on a bilateral conversation just between India and the United States—bring down the tariff levels that India has, which protect some of its industries,” Lutnick said. He suggested that for sensitive sectors like agriculture, which India has long protected to support its small farmers, a trade agreement with quotas and limits could be a viable solution. However, he stressed that India must open up its agricultural market.
“Maybe certain products have quotas. Maybe certain products have limits…And then we do the same thing on the other side and craft an agreement that makes sense for both of us,” Lutnick explained. “The Indian agriculture market has to open up. It can’t just stay closed,” he added.
The push for a trade deal follows a meeting last month between President Trump and Indian Prime Minister Narendra Modi, during which the two leaders agreed to resolve ongoing tariff disputes and aim to finalize the first phase of an agreement by the fall of 2025. The long-term goal is to achieve bilateral trade worth $500 billion by 2030.
Indian Trade Minister Piyush Goyal has been in the US for nearly a week, engaging in trade discussions, including a meeting with Lutnick on Tuesday.
**Defense Purchases and Tariffs**
Lutnick also called on India to shift its defense procurement away from Russia and toward advanced US military equipment. “India has historically bought significant amounts of its military equipment from Russia, and we think that is something that needs to end,” he said.
Last month, President Trump announced plans to boost military sales to India, including the eventual provision of F-35 fighter jets. Since 2008, India has agreed to purchase over $20 billion worth of US defense products.
On the issue of tariffs and their impact on inflation, Lutnick dismissed concerns, stating, “Inflation only comes from running deficits and printing money. Tariffs have not created inflation in India, so that argument is nonsense.”
The US currently has a $45.6 billion trade deficit with India. According to the World Trade Organization, the US trade-weighted average tariff rate is approximately 2.2%, compared to India’s 12%. Washington is pushing for New Delhi to reduce tariffs to near zero in most sectors, with the exception of agriculture, as part of the proposed bilateral trade deal.
The ongoing negotiations reflect the complexities of balancing economic interests and strategic partnerships between the two nations, as they work toward a mutually beneficial agreement.
