New Delhi: US Commerce Secretary Howard Lutnick on Friday expressed optimism about India-US trade ties, emphasizing the need for India's agricultural trade to open up amid US President Donald Trump's plans to impose reciprocal tariffs on US trading partners, including India.
Speaking virtually at the India Today Conclave, Lutnick acknowledged that finding a mutually beneficial solution would require understanding and cooperation from both sides.
He said India's agricultural trade cannot just remain closed, and suggested that it can be smarter while dealing with the most "important trading partner" US on the other side of the table.
"The Indian market for agriculture, it has to open up," the US Commerce Secretary said at the India Today Conclave. He asserted that the "good thing" about the Indian government is that it "truly understands" its market and "we understand ours".
The Secretary was asked whether some of what America has been pushing for, for example, lowering the import duty on some agricultural products, would be politically suicidal for Prime Minister Modi if he ever went down that route. How does America look at the sensitivity?
"The good thing is your government truly understands your market, and we understand ours. And the key is to try to find that place. So yes, the Indian market for agriculture, it has to open up," he responded.
"It can't just stay closed. Now, how you do that and the scale by which you do that, maybe you do quotas, maybe you do limits. You can be smarter when you have your most important trading partner on the other side of the table," he added.
Lutnick suggested that India could adopt smarter strategies, such as quotas or limits, to open up its agricultural market. He emphasized the importance of putting everything on the table and negotiating thoughtfully to craft a sensible agreement.
"Maybe certain products have quotas. Maybe certain products have limits. Maybe certain products you do in certain ways. And then we do the same thing on the other side and we craft an agreement that is sensible between the two of us," he further said.
Concerning concerns that tariffs would be inflationary for American consumers, Lutnick dismissed the idea, citing India's high tariff rates without corresponding inflation. He reiterated the US stance on reciprocal tariff treatment, emphasising that India's high tariffs would need to be reevaluated.
"There is no inflation from tariffs. As you know, I mean, India has amongst the highest, if not the highest, tariff rate in the world, the second highest tariff rate in the world. And because you have such high tariffs, do you have inflation? Of course not. Remember, inflation only comes from running deficits and printing money. India and your economy and all the people...they understand that tariffs have not created inflation in India. So my opinion to that is that's nonsense," he argued.
On the bilateral trade agreement that is expected to be inked by the fall of 2025, the Secretary said the right way to do it is on a macro level.
"The United States is interested in doing a macro, large-scale, broad-based trade agreement with India that takes everything into account, and that, I think, can be done," he said.
"It will require a different kind of thinking, big thinking, things that your prime minister can do, because your prime minister has a great relationship with President Trump," he said, being hopeful that an agreement will get through.
"It's time to do something big, something grand, something that connects India and the United States together but does it on a broad scale, not product by product, but rather the whole thing. Let's bring India's tariff policy towards America down, and America will invite India in to have really an extraordinary opportunity and relationship with us."
The US is keen on negotiating a broad-based trade agreement with India, taking into account the entire trade relationship rather than individual products.
Referring to the Trump administration's reciprocal tariff treatment, the secretary said, "How you treat us is how we would like to treat you."
He added that India has some of the highest tariffs in the world and that this will require a rethink.
Since assuming office for his second term, President Trump has reiterated his stance on tariff reciprocity, emphasising that the United States will match tariffs imposed by other countries, including India, to ensure fair trade.
During the recent meeting between President Trump and Prime Minister Narendra Modi, the two leaders resolved to expand trade and investment to make their citizens more prosperous, nations stronger, economies more innovative, and supply chains more resilient.
They resolved to deepen the US-India trade relationship to promote growth that ensures fairness, national security and job creation. To this end, the leaders set a bold new goal for bilateral trade - "Mission 500" - aiming to more than double total bilateral trade to USD 500 billion by 2030.
India's Commerce Minister Piyush Goyal was in the US this week. This follows Trump-Modi's plans to negotiate the first tranche of a mutually beneficial, multi-sector Bilateral Trade Agreement (BTA) by the fall of 2025. The two leaders had committed to designating senior representatives to advance these negotiations. (ANI)