Ahead of Trump Meeting, Indian PM Gives Tariff Cuts to US

NEW DELHI, MONDAY — Ahead of meeting with United States President Donald Trump, Indian Prime Minister Narendra Modi plans to offer additional tariff cuts for imported goods from the US. To reduce the potential threat of tariffs by the US, India will also purchase and co-produce defense equipment from the US.

The plan for extra tariff cuts was conveyed by several Indian government officials who did not want to be named, Monday (10/2/2025). The policy is inseparable from Trump's statement that India acted arbitrarily (a very big abuser) in trade relations between the two countries. Trump, when speaking with Modi late last month, urged India to buy more US-made defense equipment. This is considered one way to make the trade balance between the two countries more balanced and fair.

Three officials familiar with the plan said that tariff cuts will be given for electronics, medical and surgical equipment, bicycles, two- and four-wheeled motor vehicles at certain prices, as well as chemicals. This was also conveyed by an official from the Indian Ministry of Finance last week.

One example is the reduction of import tariffs for motorcycles with engines above 1,600 cc, from the original 50 percent to 30 percent. Import duties for motorcycles with smaller engine capacities were also reduced to only 40 percent.

During his first term (2017-2021), Trump repeatedly criticized the 100 percent import tariff imposed by India on large motorcycles (moge), such as Harley Davidson. Trump stated that this action was unacceptable and an unfair trade practice.

India enjoys a trade surplus with the US, one of its largest trading partners. Citing a report from the US Trade Representative's office, in 2022, the trade value between the US and India reached 191.8 billion US dollars. US exports to India amounted to 73 billion US dollars, while imports from India to the US totaled 118.8 billion US dollars. This resulted in a US-India trade deficit in goods and services of 45.7 billion US dollars.

In the fiscal year 2023-24, the trade value of 118 billion US dollars with India posted a surplus of 32 billion US dollars.

The main exports of the US to India include crude oil and petroleum products, liquefied natural gas (LNG), coal, medical devices, scientific instruments, scrap metal, turbojets, computers, and almonds.

Modi's statement mentioned that the visit to the US will be an opportunity for both countries to collaborate following the previous successes during Trump's first term. Modi added that technology, trade, defense, energy, and supply chain resilience are some areas of cooperation that will be enhanced and deepened.

In the upcoming meeting, Modi is expected to discuss several issues, including tariffs. According to two officials from Modi's administration, India is open to the possibility of a mini trade deal. Another official stated that this visit aims to avoid the situation that occurred between the US and China. Trump has imposed an additional 10 percent tariff on imports from China and 25 percent on Canada and Mexico. All three countries retaliated by imposing tariffs on goods from the US.

Nearly a fifth of India's engineering exports, consisting of steel and aluminum, are at risk if Trump adopts the proposed 25 percent tariffs. Exports of the two commodities are worth about $25 billion.

“We are waiting and watching, and hope that the issue can be resolved amicably during Prime Minister Narendra Modi’s visit,” said the official, who spoke on condition of anonymity because of the sensitivity of the matter.

Currently, the Indian government is finalizing negotiations on the purchase of fighter jet engines and joint production of combat vehicles with the US. Two sources who did not want to be named said that the two countries are trying to finalize talks on a contract for joint production of fighter jet engines in India for the Indian Air Force (IAF). This was agreed in 2023.

"We certainly want to accelerate transactions with the US," said Indian Defense Production Minister Sanjeev Kumar, Sunday (9/2/2025).

He added that such efforts were underway, but did not elaborate.

Officials of India's Hindustan Aeronautics Ltd (HAL), sources said, will meet with US officials and General Electric's aerospace unit, maker of the GE-414 engine. They are expected to finalize the deal by March.

In June 2023, HAL and GE Aerospace announced a deal to manufacture fighter jet engines for the IAF. The deal was announced during Modi's meeting with then US President Joe Biden. The deal is part of the IAF's efforts to increase its capacity and capabilities.

The IAF is in the process of procuring 114 multi-role fighter jets, in addition to developing a fifth-generation advanced medium combat aircraft (AMCA). In terms of systems or technology, Indian designers and experts can actually develop aerospace technology. However, for engines, India still relies on those made by leading jet manufacturers, such as Pratt & Whitney, General Electric, Honeywell Aerospace from the US, Safran SA (France), Rolls-Royce (UK), and large Russian companies such as Aviadvigatel and NPO Saturn.

The agreement includes the potential for joint production of GE Aerospace's F414 engine in India. For India, the F414 engine is significant, as it will power the IAF's LCA Mk2 jets.

The GE F414 engine has been known for its reliable performance and has been used by the U.S. Air Force for more than 30 years. It also powers the F-18 Super Hornet. The F414G, a single-engine variant of the F414, powers Saab's Gripen E/F aircraft. The F414 engine powers military aircraft in eight countries, lending its reliability to modern fighter jets. (REUTERS)