India has notified the WTO of its intention to impose retaliatory tariffs worth $724 million on U.S. goods after the U.S. raised import duties on certain Indian automobile products. This action follows a breakdown in consultations between the two countries.
Background of the Dispute U.S. Tariff Hike on Indian Goods
- On March 26, 2025, the U.S. increased import duties by 25% on passenger cars, light trucks, and auto parts from India.
- India argues that these are “safeguard measures” not aligned with WTO rules under the General Agreement on Tariffs and Trade (GATT), 1994 and the Agreement on Safeguards (AoS).
India’s Response via WTO
- India informed the WTO on July 3, stating it reserves the right to withdraw trade concessions equal to the damage suffered.
- India estimated that U.S. tariffs would impact $2.89 billion worth of its exports and lead to losses of $723.75 million.
- In response, India proposes higher duties on selected U.S. products worth the same amount.
Legal Grounds and Previous Action
- According to Article 8 of AoS, India is allowed to suspend trade benefits if consultations fail.
- The U.S. did not conduct prior consultations with India under Article 12.3 of AoS.
- A similar notice was sent in May 2025 when India responded to U.S. tariffs on steel and aluminium, with potential retaliation worth $1.91 billion.
What is WTO?
- WTO stands for World Trade Organization – it is an international body that deals with the rules of trade between countries.
- Headquarters: Geneva, Switzerland
- It was established in 1995, replacing the old GATT (General Agreement on Tariffs and Trade).
- The WTO has 164 member countries (as of 2024), including India, and covers over 98% of world trade.
- Its main goal is to promote free, fair, and smooth trade across countries.
Main Functions of WTO
- Sets global trade rules and agreements between countries.
- Solves trade disputes when countries disagree on trade matters.
- Monitors trade policies of member countries.
- Helps developing countries through training and technical support.
- Organizes negotiations to reduce trade barriers like tariffs and quotas.
India–USA Trade: Key Points
- Total Bilateral Trade: India is the USA’s 10thlargest goods trade partner (2.4% of US trade), while the US was India’s largest goods partner, accounting for 10.8% of India’s trade .
- Exports to the U.S. Export growth: from $4.87 bn in 201617 to $77.5 bn in FY 202324. Major export items in 202324: Pharmaceuticals, Gems & jewellery, Telecom instruments
- Imports from the U.S.: Imports rose from $22.3 bn in 201617 to peak at $50.9 bn in 202223, then decreased to $42.2 bn in FY24. Key import categories: crude oil, machinery, aircraft, chemicals, and IT equipment.
- Trade Imbalance & Diplomacy: India enjoys a consistent surplus (~$35 bn in FY24).
Conclusion:
India’s WTO notice highlights its stand against unilateral tariff hikes and defends its trade interests under international law. As trade talks continue, the situation underscores rising tensions in India-U.S. economic relations.
