Zero To Zero Tariffs On Steel, Auto? Here's What India Inc Is Predicting For India-US Trade Deal

Indian metal industry is looking for a zero-to-zero tariff regime on products from the US that could bolster several sectors, such as chemicals, engineering, electronics, food processing, and the steel industry, as per latest report. The expectation comes at a time when JD Vance commenced his first trip to India on April 21 since joining the US White House as 50th vice president.

Sources told MoneyControl that the domestic industry is pushing for a zero-to-zero tariff regime on products that attract sectoral duties from the United States, such as steel, aluminum, automobiles, and auto parts, through the proposed trade deal, for agriculture and food processing, they are batting for a reduction in duties on a reciprocal basis.

These sources intimated that India Inc is looking for a reduction in tariffs from India on products like chemicals, engineering goods, electronics, pharmaceuticals, and food processing in return for similar cuts from the USA as well, as per reports.

Earlier in April, US President Donald Trump imposed a 25% tariff on steel, automobiles, auto components and aluminium products that are shipped to America from other countries.

A report by Motilal Oswal revealed that the Indian auto industry is facing US tariffs in three ways: 1) 25% tariffs announced on 10th Feb'25 on steel and aluminium derivatives; 2) 25% tariffs imposed on the auto industry under Section 232 of the US Trade Expansion Act; 3) region-wise reciprocal tariffs to be levied on parts not included in the above two scenarios, with India falling in the 26% category.

However, Motilal's note added that given the detrimental impact of these tariffs on its industry, the US government has recently indicated its intent to provide some relief for the auto industry. While most regions are looking to work out a trade agreement with the US, China seems to have entered into a trade war with the US. This may prove to be a silver lining for emerging markets like India.

Though a complete shift away from China may not happen, low-cost regions like India are seeing a sharp increase in enquiries from global players, which look to de-risk away from China. Further, the Indian government has been engaged with the US government to sign a bilateral trade deal, which would be beneficial for both trading partners. Eventual winners and losers are likely to be known once there is policy certainty and once these trade agreements are finalized by all regions, it said.

"Given the Indian government's engagement with the US at an early stage, industry experts are hopeful of a favourable bilateral trade deal in the coming six months, which would be beneficial for both trading partners," Motilal's note added.

The govt intends to secure a deal where both partners would export goods to one another at favorable rates based on each other's competence, the brokerage cited experts' opinions.