India has proposed a dramatic reduction in its average tariff differential with the United States—from 13% to below 4%—in a bid to finalise a broad trade agreement with the US, The Times of India reported, citing sources from Reuters.

This marks one of the most significant tariff revisions by India in recent years and is seen as a strategic attempt to gain exemptions from current and future US tariff hikes. The talks follow President Donald Trump’s recent suspension of proposed reciprocal tariffs, including a potential 26% duty on Indian imports. Indian goods currently face a 10% base tariff under a 90-day negotiation window declared by the US last month.

In 2024, bilateral trade between the two nations reached $129 billion, with India enjoying a $45.7 billion trade surplus. The proposed tariff cut is calculated on an average basis across all traded goods, and Indian officials hope the move will improve access for key Indian exports in the US market.

As part of the evolving deal, Indian negotiators are believed to have offered to eliminate duties on 60% of tariff lines in the first phase of the agreement. India already provides preferential access—including reduced tariffs—for about 90% of items from the US, according to the report.

An Indian trade delegation is expected to visit Washington later this month to accelerate discussions and finalise terms.

India is seeking favourable treatment for several key export sectors including gems and jewellery, leather, textiles, plastics, chemicals, seafood, horticulture, and oilseeds. Officials argue that easing trade barriers will give Indian exporters a competitive edge globally.

If concluded, the agreement could reset the trade dynamic between the world’s two largest democracies and potentially open new avenues for economic collaboration.