As tensions simmer over reciprocal tariffs between India and the United States, government think tank NITI Aayog has proposed a ‘dual-track’ trade strategy to navigate the complexities of one of India’s most important bilateral economic relationships. The recommendation comes amid ongoing trade disagreements that have raised concerns over long-term cooperation and growth between the world’s two largest democracies.
Backdrop: The Tariff Tussle
The latest phase of the India-US trade row stems from retaliatory tariff measures imposed by both countries in recent years. These measures have affected a range of products — from agricultural goods to steel and electronics — straining bilateral relations that have otherwise been on a steady upward trajectory.
The United States has repeatedly expressed dissatisfaction with India’s trade protectionism, particularly in areas such as medical devices, digital services taxation, and data localization norms. In response, India has cited sovereign rights and the need to protect domestic industries, particularly small and medium enterprises (SMEs), from external shocks.
NITI Aayog’s ‘Dual-Track’ Trade Proposal
Recognizing the complexity of the trade dynamics, NITI Aayog has recommended a ‘dual-track’ strategy, which balances short-term trade protection with long-term liberalization and reform. The proposed strategy includes:
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Track One – Tactical Engagement
Continued diplomatic engagement and negotiations aimed at resolving specific disputes, ensuring WTO compliance, and working through bilateral forums such as the Trade Policy Forum (TPF). -
Track Two – Strategic Policy Reform
Gradual liberalization of critical sectors, encouraging domestic competitiveness, reducing dependency on protectionist policies, and improving ease of doing business for foreign investors.
The approach seeks to simultaneously manage existing tensions while positioning India as a reliable and open trade partner, particularly in light of shifting global supply chains and post-pandemic economic realignments.
Strategic Imperatives Behind the Move
India and the US share over $191 billion in annual trade (2023), making the US one of India’s largest trading partners. With shared democratic values and a growing strategic partnership — including defense, technology, and energy — it is crucial for both nations to prevent trade conflicts from derailing broader cooperation.
NITI Aayog’s approach emphasizes that India must not shy away from standing its ground on national interests, but should also modernize its trade architecture to keep pace with global standards.
Industry and Global Reactions
Initial responses from trade analysts and industry leaders have welcomed the idea of a dual-track strategy, seeing it as a pragmatic path that can help India avoid being isolated in global trade forums while still preserving its strategic autonomy.
The United States Trade Representative (USTR) office has not yet formally responded to this policy direction, but experts expect that it could improve the atmosphere for ongoing negotiations between the two countries.
