Ahead of the 2 April deadline for implementing reciprocal tariff, the Office of the United States Trade Representative (USTR) has raised concerns over India’s trade and investment policies in its 2025 National Trade Estimate (NTE) Report on Foreign Trade Barriers. The report, which was released on 31 March 2025, cites high tariffs, restrictive digital trade rules, weak intellectual property (IP) enforcement, and unfair procurement practices as key obstacles for U.S. businesses.
Spanning 397 pages, the report devotes 15 pages to India, highlighting various tariff and non-tariff barriers that skew trade in its favour.
High Tariff Barriers
The report notes that India’s average Most-Favored-Nation (MFN) applied tariff rate stood at 17% in 2023—the highest among major world economies—compared to 13.5% for non-agricultural goods and 39% for agricultural products.
India’s WTO-bound tariff rates on agricultural products are among the highest globally, averaging 113.1% and reaching up to 300%. The report criticizes India's ability to frequently alter tariff rates, creating uncertainty for U.S. exporters, farmers, and businesses.
Minimum Support Price (MSP)
The NTE report highlights India’s agricultural subsidies, particularly the MSP system for crops like rice and wheat, arguing that these distort global prices and disadvantage U.S. farmers. India, however, defends MSPs as essential for safeguarding its agrarian economy and ensuring food security for its 700 million rural poor.
Quality Control Measures
The report raises concerns over India’s quality control measures, which the U.S. views as trade barriers. India has made Bureau of Indian Standards (BIS) certifications mandatory across several sectors, including chemicals, medical devices, batteries, electronics, food, and textiles. Additionally, India’s requirement for in-country security testing for 175 telecommunications products has drawn criticism from U.S. industry stakeholders.
"Make in India" Policies
The report highlights India's domestic preference policies, which favor local suppliers by offering price preferences of up to 20% for domestic bidders and mandating local content in infrastructure projects.
Data Localisation
The USTR also flags India’s Digital Personal Data Protection Act (DPDPA) for restricting cross-border data transfers and mandating data localization. The report warns that sector-specific regulations could impose even stricter localization requirements.
Intellectual Property (IP) Regime
India’s intellectual property laws remain a contentious issue. The U.S. criticizes India’s patent system for being bureaucratic and restrictive, particularly Section 3(d) of the Patents Act, which limits pharmaceutical patentability. India argues that this provision prevents "evergreening" of patents and ensures affordable access to medicines.