As India readies for talks with the US on an `early tranche’ of the proposed bilateral trade agreement (BTA) this week, the Indian industry has identified just a handful of sectors, such as auto components, apparels & textiles and electronics, where the country could opt for zero-for-zero tariffs where both sides eliminate import duties for each other, according to sources. But the priority items that Washington has been pushing for, such as automobiles, motor cycles, alcohol and agriculture products, are largely absent from the list, indicating that the Indian industry feels the need for at least some protection in these sectors. The government has been in constant consultations with exporters and industry organisations to get inputs on the extent to which Washington’s expectations of tariff cuts and removal of non-tariff barriers can be met in various sectors, depending on the sensitivities, and also the opportunities that can be explored in terms of gaining more market access in the US, a source told businessline. Rules of origin There is a need for stringent rules of origin (ROO) – the criteria that determines the country of origin of a product – to ensure that third country exports don’t get benefits of the duty cuts agreed under the BTA, per a submission made to the Commerce Department by a top industry organisation in India. “The items identified by the industry for `zero-for-zero’ are mostly those which are subject to relatively high tariffs in the US and where India has a manufacturing advantage,” a source told businessline. The list of products where `zero-for-zero’ tariffs could work for India include auto components, footwear, some chemicals, apparels & textiles, and electronics, per the industry suggestion. A second group of products have also been identified where a mix of zero-for-zero and tariff reduction have been proposed which include a few lines of iron and steel, sub-sectors of engineering products, toys, gems & jewellery, petrochemicals, leather and some agriculture items. “Important discussions are scheduled between trade officials from both sides in Washington, starting April 23, on early outcomes on tariffs within the 90-day reciprocal tariff pause period. Industry inputs are important to decide on the negotiating position, including flexibilities and red lines,” the source added. US President Donald Trump announced reciprocal tariffs on most countries, including 26 per cent on India, purportedly to create a level playing field for US exporters who faced high tariffs in these countries. The tariffs were put on hold on April 9 for 90-days as Trump said that many countries had approached the US for trade deals. The ROO should not only include the criteria of 40 per cent value addition but also a change in chapter heading, the submission noted. This would ensure that third country items don’t get deceptively take advantage of the preferential tariff benefits. The ROO criteria could, however, be adjusted on a case-to-case basis. US continued to be India’s top export destination in FY25 with exports of $ 86.51 billion contributing to over 19 per cent of the country’s exports. India’s imports from the US were at $45.33 billion. Published on April 20, 2025