India should avoid FTA with US, should go for limited Zero-to-Zero tariff deal, suggests GTRI

Instead, GTRI said, India should consider a limited "Zero-to-Zero" tariff deal on 90 per cent of industrial goods, a model already offered by Europe to the U.S.

It said, "Avoid a comprehensive FTA with the US as it would force India to make damaging concessions. It's a deal that would cost India more than it gains. Restrict to Zero for zero deal on 90 per cent industrial Goods. Europe has offered similar deal to the US."

The report warned that a full FTA with the US could turn out to be a costly mistake. It highlights several demands by Washington that could hurt India's key sectors.

These include weakening India's minimum support price (MSP) system for farmers, allowing genetically modified food imports, reducing agricultural tariffs, changing patent laws to extend drug monopolies, and letting US e-commerce giants sell directly to Indian consumers.

Such changes, GTRI said, would endanger farmer incomes, threaten food security and biodiversity, affect public health, and harm small retailers. Reducing farm tariffs could impact the livelihoods of hundreds of millions of Indians.

Similarly, cutting duties on automobiles could damage India's auto industry, which contributes nearly one-third to the country's manufacturing output. The report cites the collapse of Australia's car industry after it slashed tariffs in the 1990s as a cautionary example.

The report also criticized India's past practice of offering unilateral trade concessions to the US, noting that such gestures have been dismissed by President Donald Trump as "kissing my a**."

The report advised India to focus instead on FTAs with the European Union, United Kingdom, and Canada, and explore broader partnerships with China and Russia. Strengthening trade ties with Japan, South Korea, and ASEAN countries is also recommended.

Finally, the report highlighted the potential of building joint product value chains with China in sectors like chemicals, machinery, and electronics. By using each other's raw materials and parts, both countries could boost local value in finished products for both domestic use and export.

This approach, the report said, deserves serious attention from both industry and policymakers.