US pushes India for sweeping trade reforms, calls for reduced tariffs and defense shift

The United States has ramped up pressure on India to lower trade barriers and make structural changes to its economic policies, with US President Donald Trump asserting that India is cutting tariffs due to his administration's push.

“India charges us massive tariffs. Massive. You can't even sell anything in India,” Trump said at the Oval Office.

“They have agreed, by the way; they want to cut their tariffs way down now because somebody is finally exposing them for what they have done.” he added.

Trump’s remarks came after India announced plans to reduce tariffs on key American exports, including bourbon whiskey, wines, and electric vehicles, as part of efforts to strengthen bilateral trade relations. The two nations have committed to negotiating a multi-sector Bilateral Trade Agreement (BTA) by the end of 2025, aiming for an ambitious $500 billion in annual trade by 2030.

The US has also pressed India to increase imports of American oil, gas, and defense equipment to address the current $45 billion trade deficit in India’s favor.

After Prime Minister Narendra Modi’s recent visit to Washington, Commerce Minister Piyush Goyal held talks with US counterparts to advance discussions on market access and supply chain integration.

Meanwhile, US Commerce Secretary Howard Lutnick has called for a more expansive, all-encompassing trade pact, rejecting a "product-by-product" approach.

Speaking at a media conclave, Lutnick emphasized the need for India to open its agricultural market, stating, “Because India is so gigantic, and the US is so gigantic, the right way to do it is a macro deal. It’s time to do something big, something grand.”

Lutnick also urged India to shift its defense purchases away from Russia, a long-time supplier, and instead turn to the US for military equipment.

“India has historically bought significant amounts of its military equipment from Russia, and we think that is something that needs to end,” he said.

With both sides intensifying discussions, India’s Ministry of External Affairs confirmed that reducing tariff and non-tariff barriers is a key priority under the proposed trade agreement.

As negotiations progress, Washington continues to push for broad-based economic cooperation, urging India to align its trade and defense policies more closely with American interests.