U.S. Commerce Secretary Howard Lutnick has called for a comprehensive free trade agreement (FTA) with India rather than a product-by-product approach, emphasizing the need for India to significantly reduce its tariffs across the board. Speaking at the India Today Conclave, Lutnick outlined the Trump administration’s vision for a “big, grand” trade relationship that would transform U.S.-India economic ties.
The push comes against the backdrop of imminent reciprocal tariffs from the U.S. starting April 2, which have Indian exporters concerned. Following Commerce Minister Piyush Goyal‘s recent visit to Washington (March 4-6), both countries have agreed to negotiate a bilateral trade agreement (BTA) by October, though President Trump has indicated India is unlikely to receive concessions from the upcoming tariffs.
A key point of contention is India’s tariff structure, which Lutnick described as “among the steepest globally.” WTO data shows India’s trade-weighted average tariff rate at 12%, compared to the U.S. rate of about 2.2%. The U.S. is seeking to bring India’s tariffs dramatically.
Lutnick specifically highlighted agriculture as a sector that “has to open up” despite India historically protecting it to support small farmers. He suggested that a trade agreement could include quotas and limits for sensitive industries, but maintained that opening the agricultural market remains a priority for Washington.
The Commerce Secretary also emphasized defense purchases as another critical area for improved trade relations. He explicitly called for India to end its historically significant military equipment purchases from Russia and shift toward “sophisticated U.S. products.” This aligns with Trump’s recent announcement that the U.S. will increase military sales to India starting in 2025, eventually providing F-35 fighter jets. India has already agreed to buy more than $20 billion in U.S. defense products since 2008.
Regarding concerns about potential inflation from tariffs, Lutnick dismissed these as “nonsense,” stating that “inflation only comes from running deficits and printing money.” He defended the administration’s protectionist stance, saying, “I want manufacturing to come back home. And if that means I need to put a 25% tariff on the outside world, I’ll do that.”
According to a Nomura report, India’s weighted average effective tariff on U.S. exports to India is 9.5 per cent, as compared to the 3 per cent tariff rate on India’s exports to the U.S.
Following Prime Minister Modi‘s visit to Washington last month, the two countries have set ambitious goals: resolving tariff disputes, working on the first segment of a trade deal by fall 2025, and aiming to reach bilateral trade worth $500 billion by 2030. Currently, the U.S. has a $45.6 billion trade deficit with India.
India’s Ministry of External Affairs has stated that the country is looking to deepen trade ties with the U.S. through the BTA, including reducing tariffs and non-tariff barriers, but opening the agricultural sector has traditionally been a red line for India in trade negotiations.
Last updated: December 26th, 2025
