In a bold move to deepen economic ties with the United States, India Inc has made a strategic push for a zero-to-zero tariff framework on critical sectors like steel, aluminum, and automobiles. This proposal is part of ongoing discussions surrounding a Bilateral Trade Agreement (BTA)—a pact that could potentially reshape the India-US trade landscape.
With “Mission 500” on the horizon—India’s ambitious plan to grow its goods and services exports to $500 billion—this push is more than just policy talk. It’s a decisive step toward unlocking new trade opportunities.
What Are Zero-to-Zero Tariffs?
A zero-to-zero tariff deal means both countries agree to remove import duties on specific goods, ensuring mutual market access without extra costs. It boosts competitiveness and simplifies trade.
For India, it could make its exports cheaper and more attractive to US buyers. For American companies, it means easier access to India’s fast-growing market.
Why Focus on Steel, Aluminum, and Autos?
These industries form the backbone of India’s manufacturing sector and are closely linked to employment, infrastructure, and economic growth.
- Steel & Aluminum: Heavily tariffed by the US in recent years under Section 232, citing national security. Removing duties would make Indian metals more cost-effective in the US market.
- Automobiles: India is becoming a global auto hub. Zero tariffs can boost exports of EVs, auto components, and two-wheelers.
This move could also counterbalance China’s dominance in global supply chains and support the India-US strategic alliance.
The Larger Goal: Strengthening Economic Partnership
Trade has always been a cornerstone of India-US relations. In 2023, the US was India’s largest trading partner, with bilateral trade touching over $120 billion.
By reducing friction through zero tariffs:
- Indian exporters gain easier access to US markets.
- American firms benefit from India’s manufacturing scale and skilled workforce.
- Both countries can diversify supply chains, reducing overdependence on a single region.
Challenges on the Way
While the idea is promising, negotiations will require:
- Alignment on regulatory standards
- Environmental and labor concerns
- Political will on both sides to navigate domestic sensitivities
Why This Matters for Mission 500
As India eyes $500 billion in exports, trade partnerships like this could be game-changers. Lowering trade barriers is one of the fastest ways to boost volume and reach new markets.
This move signals India’s intent: to lead in global trade, champion manufacturing, and partner with strategic allies.
