Government should convey to the U.S. that Indian tariffs are WTO-compliant, says think tank GTRI

GTRI said that India’s best options to deal with the U.S.’s threat to impose high duties include offering zero tariffs on most industrial goods to the U.S., or absorbing new U.S. tariffs without retaliation
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India’s import duties are in compliance with global trade rules and the government should convey this to the U.S. administration, Global Trade Research Initiative (GTRI), an economic think tank, said on Sunday (March 2, 2025).

It also said that negotiating a comprehensive Free Trade Agreement (FTA) with the U.S. presents several challenges.

The U.S. may push India to open government procurement to American firms, reduce agricultural subsidies, weaken patent protections by allowing evergreening, and remove restrictions on data flows, it said, adding India had resisted these demands for decades and was still not prepared to accept them.

U.S. President Donald Trump on multiple occasions has alleged that India had high tariffs and termed it “tariff king” and “tariff abuser”.

Tariffs are import duties imposed and collected by the government and paid by companies to bring foreign goods into the country.

“India’s tariffs are consistent with WTO (World Trade Organization) rules. They are the result of a single undertaking at the WTO which all countries, including the U.S., approved in 1995…Indian tariffs are WTO compliant. The Indian side needs to explain [this] to the U.S.,” GTRI founder Ajay Srivastava said.

The 166-member forum is the only international body that deals with the rules of trade between nations.

When the WTO was established in 1995, developed nations agreed to let developing countries retain higher tariffs in exchange for commitments on Trade-Related Aspects of Intellectual Property Rights (TRIPS), services trade liberalisation, and agricultural rules that primarily favoured wealthier nations.

Mr. Srivastava said many developing nations argue that the commitments made under TRIPS and agriculture had disproportionately benefited developed countries, limiting their ability to industrialise.

“[U.S. President] Trump, while talking about India’s high tariffs, conveniently forgets this,” he added.

He also said that India’s exports to America often have low local value addition and this must be considered when assessing trade balances between the two countries.

The sectors where local value addition in exported goods are low include iPhones, solar panels, diamonds, and petrochemicals, he said.

The GTRI further said that India’s best options to deal with the U.S.’s threat to impose high duties include offering zero tariffs on most industrial goods to the U.S., or absorbing new U.S. tariffs without retaliation “much like Shiva consumed poison without swallowing it”.

“FTA negotiations will take time, and by the time an agreement is reached, Trump may have already imposed reciprocal tariffs, making the deal ineffective. On account of these reasons, this option is the worst option, [and is] not advisable,” the GTRI said.