What: India's strategic tariff reduction proposal aims to double bilateral trade with the US to USD 500 billion by 2030, reshaping global retail supply chains amid escalating trade tensions.

Why it is important: As global retailers face unprecedented supply chain disruption and USD 640 billion in additional US-China tariff costs, India's proposal represents a critical opportunity to establish new trade corridors and stabilise retail operations in an increasingly volatile market.

India's proactive approach to US trade negotiations marks a significant shift in global retail dynamics, with the government formulating comprehensive Terms of Reference for a bilateral trade agreement. The initiative focuses on key retail sectors, including automobiles, textiles, leather goods, pharmaceuticals, and electronics, addressing both tariff and non-tariff barriers. This development comes at a crucial time, as Minister of State Jitin Prasada confirms both nations' commitment to a multi-sector trade agreement aimed at enhancing market access and deepening supply chain integration. The negotiations gain additional significance against the backdrop of potential US reciprocal tariffs and growing trade pressures. India's response demonstrates a balanced approach, combining diplomatic engagement with practical measures to protect domestic industries while pursuing increased market access. The government's consultations with industry stakeholders and focus on high-sensitivity sectors reflect a strategic effort to craft mutually beneficial trade terms that could reshape retail supply chains across both markets.

IADS Notes: The India-US trade negotiations emerge at a critical juncture in global retail dynamics. As reported in March 2025, consumer anxiety about trade policies has reached unprecedented levels, with 62% expressing concern about rising retail prices. This comes as BCG's January 2025 analysis projects USD 640 billion in additional US import costs from expanded tariffs, making India's proposal particularly timely. The negotiations align with broader industry shifts, as fashion brands actively diversify their sourcing strategies away from China, while India's retail market, projected to reach USD 2 trillion by 2033, positions itself as an attractive alternative. The establishment of Free Trade Warehousing Zones in India further supports this transition, offering retailers the infrastructure needed for efficient market entry. This development gains additional significance as major US retailers like Macy's implement aggressive store optimisation plans in response to trade pressures, suggesting a potential reshaping of global retail supply chains.

India prepares enhanced tariff reduction proposal for US trade deal