India formally notified the World Trade Organization (WTO) on Friday of its plan to impose retaliatory tariffs on select US products, responding to the United States’ decision to raise import duties on Indian automobile parts.
US Tariff Measures
In a communication to the WTO’s Council for Trade in Goods, India cited safeguard measures adopted on March 26 by the US, which include a 25% ad valorem tariff on imports of passenger vehicles, light trucks, and certain auto components from India. These tariffs are effective from May 3, 2025, and remain in place indefinitely.
India’s Response
India has invoked Article 12.5 of the Agreement on Safeguards, stating its intention to impose retaliatory duties on select US products. The WTO’s Council for Trade in Goods was notified by India of the proposed suspension of concessions and other obligations under certain WTO provisions.
“The proposed suspension of concessions or other obligations would take the form of an increase in tariffs on selected products originating in the United States,” according to India’s WTO notification, the Press Trust of India reported.
“This notification is made in connection with safeguard measures extended by the United States of America on imports of automobile parts from India,” the notification stated.
Trade Impact and Legal Position
A Hindustan Times report suggests that the estimated trade affected by the US action is valued at $2.9 billion, with India seeking to reciprocally recover $723.75 million annually through its proposed tariff measures.
India has maintained that the measures taken by the United States are not consistent with the GATT (General Agreement on Trade and Tariff) 1994 and the Agreement on Safeguards.
Washington had previously rejected India’s notice for WTO consultations on the US’s 25% tariff on automobile parts. As per a WTO paper, this asserted that the auto duties were imposed on national security grounds and therefore are not subject to multilateral trade rules.
India-US FTA
In regards to the Free Trade Agreement with USA, India’s Minister of Commerce Piyush Goyal said India is ready to make trade deals in the national interest, but not just to meet deadlines.
US President Donald Trump has threatened to impose a 26% tariff on all imported Indian goods, among the tariffs due to take effect next week on countries around the world who fail to reach agreements before a deadline he set in April.
“Free trade agreements are possible only when there is two-way benefit, it should be a win-win agreement,” Goyal told reporters.
“National interest will always be supreme. Keeping that in mind, if a good deal can be made, then India is always ready to make a deal with developed countries,” he said.
This comes in after an Indian delegation returned from Washington this week after an extended visit to iron out lingering concerns on both sides.
(with inputs from Reuters)
