Ahead of Prime Minister Narendra Modi’s visit to the US, the government has slashed customs duties on not just America’s iconic Harley Davidson motorbikes but also several other items of interest to American exporters, ranging from fish feed inputs and waste scrap to satellite ground installations.

The unilateral lowering of tariffs may help set a positive tone for Modi’s meeting with US President Donald Trump, who has been a constant critic of India’s “high tariffs”, a source tracking the matter said. The meeting may happen later this month but a formal date is yet to be decided.

India’s plans to amend its nuclear liability law and set up a nuclear energy mission, announced in the Union Budget, is also likely to please the US as it would boost private and foreign investments and encourage India-US collaboration in the civil-nuclear field, sources said.

“While Trump has often criticised India’s tariff policies, these latest reductions signal a policy shift that could enhance US exports across various sectors. With key tariff cuts on technology, automobiles, industrial inputs, and waste imports, India appears to be taking steps toward facilitating trade even as the global trade environment remains tense,” said Ajay Srivastava from Delhi-based research body GTRI.

The government is of the view that the customs duty rejig will benefit industry and businesses at large. “We have always been responsive to industry’s requests on reduction of tariffs and duties. This is a continuation of that effort and will send a positive message to the business and industry. It will help manufacturing grow because raw materials and intermediate products will make our products more competitive in the international market,” Commerce & Industry Minister Piyush Goyal told businessline when asked if the duty cuts were to satisfy Trump.

Fair bilateral trading relationship

In his phone call with Modi on January 28, Trump said that India needs to move towards a fair bilateral trading relationship with the US and buy more American-made security equipment. The two leaders also discussed plans for the Indian PM to visit the White House.  Trump had earlier threatened India with `reciprocal tariffs’ if it did not reduce its tariffs.

In the Union Budget announced on Saturday, key tariff reductions favouring the US include lowering of import duty on fish hydrolysate (used in aquatic feed) to 5 per cent from 15 per cent. US exporters, who shipped the item valued at $35 million to India in FY24, directly stand to gain, a GTRI report noted.

The halving of import duties, from 20 per cent to 10 per cent, on ethernet switches in the `others’ category, will also benefit American companies which exported items worth $653.4 million to India in FY24.

Similarly, lowering import duties on synthetic flavoring essences to 20 per cent from 100 per cent and eliminating duties on ground installation for satellites are also set to benefit American companies.

The budget brought down tariffs on motorcycles most significantly for the above 1,600cc category, to 30 per cent from 50 per cent, a move which is likely to benefit Harley Davidson which has most of its product lineup in this category. For motorbikes below 1,600 cc import tariffs have been reduced to 40 per cent from 50 per cent. 

“US motorcycle exports to India stood at $3 million in FY24, and this tariff cut could help expand market access for American manufacturers,” the GTRI analysis said.

India also eliminated tariffs on specific waste and scrap items, reducing duties from 5 per cent to zero. The US exported a total of $2.5 billion worth of waste and scrap of all types to India in FY24.

The US is India’s top export destination with exports to the country valued at $77.5 billion in FY24 leading to a trade surplus of about $35 billion.

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