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India is open to cutting tariffs on more than half of U.S. imports worth $23 billion in the first phase of a trade deal the two nations are negotiating, two government sources with knowledge of the matter said, the biggest cut in years, aimed at fending off reciprocal tariffs.

Mitigate tariff impact

The South Asian nation wants to mitigate the impact of U.S. President Donald Trump’s reciprocal worldwide tariffs set to take effect from April 2, a threat that has disrupted markets and sent policymakers scrambling, even among Western allies.

In an internal analysis, New Delhi estimated such reciprocal tariffs would hit 87% of its total exports to the U.S. worth $66 billion, two government sources with knowledge of the matter told Reuters.

Under the deal, India is open to reducing tariffs on 55% of U.S. goods it imports that are now subject to tariffs ranging from 5% to 30%, said both sources, who sought anonymity as they were not authorised to speak to the media.

In this category of goods, India is ready to “substantially” lower tariffs or even scrap some entirely, on imported goods worth more than $23 billion from the U.S. one of the sources said.

India’s Trade Ministry, the PMO and a government spokesperson did not reply to mail seeking comments.

Overall the U.S. trade-weighted average tariff has been about 2.2%, data from the World Trade Organization shows, compared with India’s 12%. The United States has a trade deficit of $45.6 billion with India.

During Prime Minister Narendra Modi’s U.S. visit in February 2025, the two nations agreed to start talks towards clinching an early trade deal and resolving their standoff on tariffs.

New Delhi wants to strike a deal before the reciprocal tariffs are announced and Assistant U.S. Trade Representative for South and Central Asia Brendan Lynch will lead a delegation of officials from United States for trade talks from Tuesday (March 25, 2025).

India is also considering wider tariff reform to lower barriers uniformly, but such discussions are in early stages and might not figure immediately in talks with the United States, said one of the officials.