New Delhi: Although US President Donald Trump’s rhetoric and tariff actions have been projected as a major threat to India’s trade and attributed to India’s “protectionism”, the underlying push from Washington has been about securing greater access for US companies to Indian markets.
Since 2014, India has tightened regulations aimed at safeguarding consumers and domestic producers, and these have become the main friction points.
ITIF, USTR Turn on the Heat
Just days before the Pahalgam massacre—an attack that many in India felt drew a muted and subdued response from Washington despite the US describing India as a key ally—a Washington-based technology and trade policy think-tank, the Information Technology and Innovation Foundation (ITIF), released a report ranking India as the second most problematic trading partner after China.
The restrained US reaction to the terror strike was seen in New Delhi as linked to Washington’s growing irritation over India’s refusal to accept American trade demands, a frustration that was being channelled through reports and statements branding India as protectionist.
Its 10 March Trade Imbalance Index flagged India’s $45.7 billion trade surplus with the US, average tariffs of 12–14% compared to America’s 2.2%, and what it called one of the world’s most restrictive services markets. The report criticized India’s high duties on IT hardware, medical devices, solar equipment and pharmaceuticals, the expansion of its “equalization levy” on foreign digital firms, the proposed Digital Competition Act modelled on Europe’s Digital Markets Act, and antitrust penalties against Meta and Google.
ITIF also highlighted India’s continued presence on the Office of the United States Trade Representative’s (USTR’s) Priority Watch List for weak IP enforcement, pointing to Section 3(d) of the Patent Act as a barrier to pharmaceutical patents. The think-tank, which openly advocates for US industry access to foreign markets, has outsized influence in Washington’s trade debate—its reports are regularly cited by lawmakers and trade officials. Its critics note that its assessments are heavily tilted toward US commercial interests, portraying India’s consumer and producer protection rules as market barriers.
It stated that India will be among the nations most susceptible to Trump’s retaliatory measures due to the presence of digital economy fines on US-based companies. It cited the Reserve Bank of India fining Amazon Pay Rs 30.6 million for violations of “Master Directions on Prepaid Payment Instruments” and “Know Your Customer” provisions, along with penalties on Meta ($24.5 million) for WhatsApp’s data-sharing policy and Google ($154 million) for Android practices. ITIF portrays this as India “scrutinizing” US tech companies in the same way the European Union does.
Significantly, this report was followed by the 2025 National Trade Estimate report, submitted to Trump and Congress on 31 March by the Office of the US Trade Representative. The document covers nearly 60 countries but devoted a 16-page assessment on India—far longer than the two-page treatment given to many others. Inputs came from USTR staff and the interagency Trade Policy Staff Committee, which includes officials from departments such as Agriculture, Commerce, Defense, Energy, and Treasury, as well as the US International Trade Commission, and drew on information from US embassies worldwide.
A careful read of this “chargesheet” against India, however, shows how the global narrative has been skewed in the balance of the US, presenting it as barriers for US firms that can only be taken down by penalties on India through tariff pressure.
However, these very “barriers” for India are policy choices to protect citizens, enforce competition and assert sovereignty. For New Delhi, they are instruments to shield farmers and patients, and to preserve the policy flexibility that a country of India’s size insists it must have.
Patients, Farmers, and Data: India’s Red Lines
The report attacks India’s price controls on coronary stents and knee implants, imposed by the National Pharmaceutical Pricing Authority. Yet before the cap was introduced in 2017, drug-eluting stents sold for as much as Rs 1.2–1.5 lakh (around $1,800–$2,200), a level that put them out of reach for many patients. NPPA cut that ceiling to Rs 29,600 ($450), while bare-metal stents were fixed at Rs 7,260 ($110). Washington argues such controls deter innovation and discourage US firms, but India insists they are essential to prevent profiteering and to keep life-saving procedures affordable.
On the digital side, USTR calls out the RBI’s mandate that electronic payment companies store all Indian transaction data on local servers, along with the 2023 Digital Personal Data Protection Act, which empowers the government to restrict cross-border transfers. It also objects to the IT Rules of 2021, which impose strict deadlines for takedowns and even personal liability on employees of tech companies, and to the growing number of internet shutdowns that Washington argues disrupt trade and services. For US platforms, these are barriers to free digital trade. For India, they are pillars of digital sovereignty—officials argue they are meant to strengthen fraud enforcement, protect user privacy, and ensure accountability in a politically and socially sensitive environment.
Antitrust enforcement features prominently in the US critique. American industry groups cite fines on Meta and Google as overreach, but Indian regulators point to the EU’s own actions against Big Tech and argue that without such interventions, domestic competition and consumer choice would be undermined. The equalization levy, first set at 6% on digital advertising in 2016 and expanded to 2% on e-commerce revenues in 2020 before being pared back in 2024, is denounced by Washington as discriminatory. India presents it as a necessary interim measure to ensure that companies profiting in its digital economy contribute to its tax base.
The USTR also pressed India to ease restrictions on dairy and poultry imports. While Washington sees them as valuable export markets, for India they are politically untouchable. Officials point out that much of US dairy comes from cattle raised on feed containing blood meal and animal by-products, practices that violate Indian sanitary standards and religious sensitivities. New Delhi argues that allowing such products would not only undercut millions of smallholder farmers but also run against cultural and consumer safeguards, making dairy one of the clearest red lines in any negotiation.
Agriculture remains a lightning rod. India’s bound tariff ceilings average 113% and reach 300% on some goods, giving wide latitude for sudden hikes. USTR points to past increases on pulses, ICT products, medical devices and chemicals as evidence of unpredictability. Yet Indian officials argue these tools are needed to stabilize markets and maintain food security. The Minimum Support Price program for rice and wheat, along with subsidies on fertilizer and electricity, are labelled trade-distorting by Washington but are seen in India as the backbone of rural stability.
Similarly, certificate requirements introduced by FSSAI for dairy, pork and fish—criticized in Washington as duplicative and unscientific—are presented in Delhi as basic safeguards for food safety.
The critique extends deep into India’s services sector as well. Washington has complained about the 30% market-share ceiling imposed by the National Payments Corporation of India on foreign digital payments players, the use of a proprietary QR code in the rollout of the National Common Mobility Card, foreign ownership caps of 74% in private banks and 20% in public banks, and limits of 26% in newspapers and digital media. It also objects to residency and solvency rules even after India raised FDI in insurance to 100%. And in satellite broadcasting, India’s rule that direct-to-home providers lease capacity only through ISRO’s commercial arm Antrix is attacked as discriminatory.
India’s Safeguards Versus U.S. ‘Barriers’
India’s response in each case is the same: these are structural choices to keep critical infrastructure, financial flows, and mass media from being dominated by foreign interests.
The same duality extends to government procurement. USTR calls India’s “Make in India” content rules a barrier, citing orders that reserve dozens of product categories—from solar cells to IT hardware—for suppliers with 50% or more local value. India defends them as levers to build capacity, create jobs, and reduce dependence on imports in strategic sectors.
A surcharge of 10% on imports since 2018 is described by the US as an unnecessary cost; India calls it a fiscal measure applied across the board.
Import licensing rules for refurbished and remanufactured goods are portrayed as arbitrary; India presents them as safeguards against dumping outdated technology. Mandatory domestic testing of telecom and IT equipment is depicted as costly duplication; India frames it as essential for security and quality assurance.
The 2025 NTE devotes more pages to India than to almost any other country, but the pattern is consistent. Measures that US exporters consider restrictive are those which are needed to serve 1.4 billion citizens, millions of farmers, and the country’s strategic need for autonomy.
In that sense the report is less a neutral list of trade frictions and more a mirror of competing priorities: market access for American companies versus welfare, sovereignty, and industrial policy for India.
If India Gave In: The Cost of Compliance
If New Delhi were to accept the USTR’s recommendations wholesale, the Indian market would look very different—and not necessarily to the advantage of ordinary citizens.
Scrapping the NPPA’s price cap on medical devices would mean drug-eluting stents, now fixed at Rs 29,600, could return to the Rs 1.2–1.5 lakh range seen before 2017, while knee implants too would once again become unaffordable for millions.
Opening the dairy and poultry sector to US imports might bring cheaper cheese, milk powder and poultry to some urban consumers, but it would devastate the livelihoods of nearly 80 million small farmers and push aside India’s religious and sanitary safeguards, including the ban on products from cattle fed with blood meal.
Rolling back the Minimum Support Price system and grain stockpiles would strip farmers of protection against global price swings and weaken the food security buffer that underpins the public distribution system, leaving rural incomes vulnerable.
Dismantling RBI’s data localization mandate and loosening the 2023 Digital Personal Data Protection Act would ease compliance for US firms but shift control of sensitive financial and personal data away from Indian regulators, exposing consumers to greater risks of misuse.
Halting antitrust action and dropping the equalization levy would give US tech giants free rein, squeezing Indian startups and eroding India’s ability to tax foreign digital revenues.
And if tariffs were lowered from India’s average 17% toward the US level of 2.2%, imports might become cheaper, but domestic industries from electronics to solar equipment would be swamped by foreign competition, while “Make in India” procurement rules would collapse, undermining the government’s drive for jobs and self-reliance.
In short, while Trump has called India one of the world’s most protectionist economies, for New Delhi these policies are not barriers but necessities—designed to protect patients from unaffordable healthcare, safeguard millions of farmers from being priced out, secure the privacy of citizens in the digital era, and keep critical sectors from slipping out of domestic hands.
India’s decision not to accede to US demands is, therefore, less about defiance and more about ensuring that trade policy serves the larger interests of its people rather than the commercial priorities of foreign corporations.
