India's government is considering various options, such as a trade deal, reducing tariffs, and increasing imports from the US if US President Donald Trump goes ahead with the threatened trade action.

Officials in the Narendra Modi government have outlined different strategies to address potential actions a new Trump administration might take to reduce India’s $35.3 billion trade surplus with the US for the year ending March 31, according to sources. The US was India’s biggest trading partner during this period, as per data from India’s commerce ministry. The government might purchase more whiskey, steel and oil from the United States, according to the people, who asked not to be named since the discussions are confidential. By creating a list of potential products, including bourbon whiskey and agricultural products like pecan nuts, officials claimed it might help lower some import duties.  

According to one of the sources, lowering taxes on goods imported from US states that are significant to the Republican Party politically is one of the concepts under consideration. India's strategy aims to avoid conflicts with Trump while also taking advantage of a possible US-China trade war, according to sources. Bloomberg News reported on Tuesday that New Delhi plans to accept at least 18,000 illegal Indian immigrants from the US to help maintain good relations with the Trump administration. The representative for the trade ministry did not immediately respond to an email requesting remarks. The proposals are still being discussed and have not been finalised, according to the people.  

On his first day in office on Monday, Trump announced plans to impose a 25% tariff on Mexico and Canada by February 1 while delaying the introduction of tariffs specifically targeting China. He also warned that BRICS nations, a group of developing countries, could face increased tariffs. Meanwhile, Indian officials are exploring the possibility of a limited trade deal with the US as one of their options, according to sources familiar with the matter. New Delhi had previously attempted to establish such a deal during Trump’s first term but was unsuccessful. The plan being discussed involves lowering certain "most-favoured nation" tariffs, which are applied to countries that don’t have a bilateral trade agreement with India. 

According to those with knowledge of the situation, the following scenarios are more specific:

• India could consider buying more goods from the US in sectors including soybean, dairy, vehicles, medical instruments, and aircraft.

• Electronics, hi-tech machinery, textiles, footwear and chemicals are among the sectors to benefit if China is slapped with higher tariffs by the US and curbs on access to advanced technology.

• India expects the new Trump administration to pressure the country on issues including data regulations, intellectual property rules and e-commerce.

• Across the board tariffs of 10 per cent-20 per cent on all countries would help boost India’s exports of auto components and metals.