A three-part deal with US can be explored; India unlikely to eliminate all tariffs on American exports: Sunil Subramaniam

Amid renewed discussions over Indo-US trade ties, a nuanced view has emerged from Sunil Subramaniam, a prominent market strategist and managing director of Sundaram Mutual. He asserts that while India can consider a calibrated three-part trade deal with the United States, a complete elimination of tariffs on American exports is neither feasible nor strategically advisable for India. His remarks come at a time when the two nations are attempting to resolve long-pending trade irritants and align on economic priorities ahead of potential political leadership changes in the United States.

Subramaniam’s insights reflect a broader sentiment in India’s policymaking circles—engagement with caution. As India positions itself as a critical player in global supply chains and economic partnerships, it is keen to preserve its economic autonomy while also remaining open to negotiated trade facilitation.

India’s evolving trade diplomacy: The three-part deal proposal

Sunil Subramaniam emphasized that India could explore a three-part structured deal with the United States, with each leg of the agreement focusing on a different set of economic interests. The proposed model could include:

1. Selective tariff concessions for American goods in non-sensitive sectors.
2. Expanded access for Indian exports in critical categories such as pharmaceuticals, textiles, and software services.
3. Strategic bilateral commitments around energy, defense, and technology transfers.

This modular strategy allows both countries to move forward without insisting on sweeping changes. It acknowledges mutual sensitivities while still building pathways for greater economic integration.

What the deal could look like: Segment-wise focus

To visualize how such a tripartite deal might be structured, the following outlines the potential categories and trade stances:

This framework shows that India’s trade engagement would be sector-specific, not blanket in nature. Sectors like agriculture and auto are likely to remain protected, while others like pharma and software services could benefit from deeper bilateral cooperation.

Why India won’t go for zero tariffs

India has historically maintained a calibrated tariff regime to nurture domestic industries, protect employment, and ensure self-reliance in food and manufacturing. Sunil Subramaniam reiterated that a complete rollback of tariffs, especially in politically sensitive sectors like agriculture and dairy, is improbable due to:

• Electoral pressures from rural constituencies
• Concerns over large-scale dumping of subsidized U.S. goods
• India’s goal of becoming self-reliant under ‘Aatmanirbhar Bharat’

According to trade analysts, India’s average tariff rate across all sectors stands at about 13%, with farm and dairy products taxed at rates exceeding 35%–40%. Completely removing these duties could destabilize India’s rural economy and draw domestic political backlash.

Tariff structure: Comparative view

This disparity in tariff regimes is a major point of contention in Indo-US trade talks. While the U.S. demands parity, India defends its right to nurture domestic sectors.

What’s in it for India?

From India’s standpoint, a well-negotiated deal could unlock a range of benefits:

• Greater access to U.S. markets for pharma, IT, textiles, and specialty chemicals.
• Strategic technology collaborations in defense, AI, and semiconductors.
• Higher investment inflows from U.S. firms seeking China+1 supply chain alternatives.
• Diversification of energy imports by increasing U.S. LNG and crude procurement.

Subramaniam argues that these gains could compensate for any selective tariff cuts, provided the deal is carefully calibrated to avoid exposure in vulnerable sectors.

A question of timing and leadership

With the possibility of Donald Trump returning to the White House in 2025, India’s trade negotiators are watching the political landscape closely. Trump’s past moves—including the withdrawal of India’s GSP (Generalized System of Preferences) benefits—indicate a protectionist stance. However, his business-minded approach may leave space for deal-making on mutually beneficial terms.

Subramaniam believes that “any incoming administration, regardless of party, will prioritize real trade wins over sweeping ideological stances.” India should be prepared with a concrete proposal centered around mutual economic gains.

Market sentiment and investor outlook

Markets have reacted cautiously to the tariff debate. Export-heavy stocks have seen minor corrections, while broader indices have remained stable. Sunil Subramaniam advises investors to look beyond headlines, stating:

“Trade tensions are real, but so are opportunities. A rational deal can unlock access, reduce volatility, and position India as a long-term growth story.”

He also suggests sectors like pharmaceuticals, textiles, green energy, and defense could emerge as major gainers in the event of a structured agreement.

Conclusion

While India and the U.S. may not see eye to eye on every trade issue, Subramaniam’s suggestion of a three-part deal provides a pragmatic framework to move the discussions forward. It acknowledges India’s need to protect its core economic interests while offering room for strategic engagement with the world’s largest economy.

As the geopolitical and economic landscape shifts, India is walking a fine line—offering partnership without surrendering autonomy. The key will be careful segmentation, smart diplomacy, and firm political resolve.

Disclaimer: This article is based on public commentary and expert analysis. Trade negotiations are subject to ongoing government deliberations and international developments. Readers are advised to consult official statements for the latest updates.