USTR’s National Trade Estimate Report on Foreign Trade Barriers, 2025

The Office of the United States Trade Representative (“USTR”) published the National Trade Estimate Report on Foreign Trade Barriers (“NTE”) on March 31, 2025.[1] The NTE is an annual report that the USTR compiles under Section 181 of Trade Act, 1974. Each year, the NTE identifies and analyses acts, policies or practices of countries which act as significant barriers or distortions to US trade and is presented to the US President and the Congress, to raise awareness and facilitate US trade negotiations.

The publication of the NTE precedes the “reciprocal tariffs” announced by US President Donald Trump on April 2, 2025.[2] The “reciprocal” tariffs announced aim to address US trade imbalances, by “confronting the unfair tariff disparities and non-tariff barriers imposed by other countries”[3], many of which have been identified in the NTE published by the USTR this year.

This year’s NTE covers nearly 60 countries and assumes great significance for India, given the particular attention that President Donald Trump has given to India’s tariffs and non-tariff barriers in announcing “reciprocal” tariffs[4] and the ongoing trade negotiations to conclude a US-India Bilateral Trade Agreement (“BTA”).[5] Keeping in mind these recent developments, this ELP update provides a summary of the NTE’s key findings on India.

The USTR has particularly identified restrictions in India’s policies on imports, technical (“TBT”) and sanitary and phytosanitary (“SPS”) barriers to trade, government procurement, intellectual property rights (“IPRs”), services trade, electronic commerce and digital trade, subsidies and other barriers. It has inter alia found as follows:
Import policies

• India’s average most-favoured nation applied tariff rate of 17.0% in 2023 remain the “highest of any major world economy”.
• India’s tariffs on goods, like corn, motorcycles, automobiles, walnuts and alcohol, remain high.
• US agricultural sector faces “tremendous uncertainty” due to significant difference in India’s World Trade Organization (“WTO”) bound rates and the applied rates on agricultural products.
• India’s application of quantitative restrictions is “opaque and unpredictable”, affecting the ability of US exporters to access Indian market.
• Licensing conditions put by India on imports of products, like boric acid, include arbitrary quantity approvals and other requirements only applicable to imports. Long periods of time pass before the issuance of import licenses.
• Similar “onerous” regulations and delays are faced by US entities in respect of licenses for imports of remanufactured or used goods, including refurbished medical goods.
• India’s customs system is “complex and open to administrative discretion”. Modifications to tariffs are made on an “ad hoc basis” and without the “opportunity to comment”.
• US exporters have concerns regarding India’s application of customs valuation criteria to imports and highlight inspections and seizures that are not risk-based, extensive documentation, regional variations in customs procedures as barriers.

TBT and SPS barriers

• There are concerns that Bureau of India Standards (“BIS”) administered by India for quality control purposes are not aligned with international standards. Moreover, there is a lack clear timelines for transition periods and license validity, and stakeholders are not consulted in the development of the BIS standards.
• No timeline for enforcement of the Food Safety and Standards Authority of India’s (“FSSAI”) Safety Standards (Alcoholic Beverages Amendment) Regulations, 2023, have been specified.
• Mandatory domestic testing and certification requirements for telecom and ICT equipment set out by the Department of Telecommunications and Ministry of Electronics and Information Technology are concerning due to lack of government testing capacity, cumbersome registration processes, unreasoned cancellations and additional compliance.
• Administrative approvals for products derived from biotechnology and certification requirements for Genetically Modified products do not appear to have any scientific or risk-based justifications.
• Imports of US dairy products and certain grains face “onerous” or “unclear” requirements.
• India’s zero-tolerance standards for certain plant pests which pose plant health risks do not appear to be based on risk-assessment and constrain exports of US grains and pulses.

Government procurement

• India lacks an overarching government procurement policy and practices and procedures differ among various ministries within the central government.
• India provides procurement preferences to micro-, small- and medium-sized enterprises and state-owned enterprises.
• In defence procurements, India’s offset program requires companies to invest 30% or more of the acquisition cost of contracts above threshold in Indian-produced parts, equipment or services. That continues to be a challenge for US companies.
• India’s Department of Promotion of Industry and Internal Trade issued the Public Procurement (Preference to Make in India) Order 2020, mandating preferences for domestically manufactured goods. Updates to those rules instruct each Indian ministry to draft their own follow-on rules to favour domestic suppliers. In this regard, the rules framed by the Ministry of New and Renewable Energy and Ministry of Electronics and Information Technology are notable.
• Amendments in 2020 to the General Financial Rules require that foreign tender enquiries may not be accepted under $31 million and further reductions require permission of authorities.
• India is not a party to the WTO Agreement on Government Procurement.

IPRs

• India remains on the US Priority Watch List due to inconsistent progress on long-standing concerns regarding IPRs.
• Policy uncertainty and ineffective enforcement of copyrights remain concerning since copyright holders continue to report high levels of piracy, particularly online.
• Patent applicants have reported long waiting periods for receipt of grants and excessive reporting requirements. Potential threat of revocations and the procedural and discretionary invocation of patentability criteria remain concerning.
• Pharmaceutical stakeholders continue to raise concerns as to whether India has an effective system for protecting against unfair commercial use and unauthorized disclosure of undisclosed test or other data
• India’s overall IP enforcement remains inadequate. Trademark opposition proceedings and lack of quality in examination remain concerning.
• Dedicated IP divisions at High Courts, additional staffing and sensitization are needed.

Services trade

• Foreign investment in several major services sectors is subject to limitations on foreign equity. Examples of such sectors also include audiovisual services, distribution or retail services, financial (banking, insurance, electronic payments) services.
• Foreign participation in professional services is significantly restricted. Examples of such sectors include legal services and accounting services.
• In the Telecommunication sector, the Indian government maintains preference for Indian satellite to provide capacity for direct-to-home (DTH) subscription television services.

Electronic commerce and digital trade

• The Reserve Bank of India has implemented since 2018 a requirement that all payment services suppliers store information related to electronic payments by Indian citizens on servers located in India. In 2019, this requirement was also applied to banks operating in India. Firms have identified that these requirements hamper their ability to detect fraud and ensure security of networks
• India’s Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, impose a number of requirements that US stakeholders have identified as concerning.
• India has conducted several localized shutdowns of the internet in recent years.
• India continues to impose a six percent “equalization levy” on gross revenue received by non-Indian residents for online advertisement and related services provided to Indian purchasers.
• Draft implementing rules released pursuant to the Digital Personal Data Protection Act impose potentially burdensome requirements on data fiduciaries, require disclosure of personal data to the government and permit the government to restrict cross-border data transfers.

Subsidies

• India continues to provide a broad range of subsidies and support to agricultural sector which lower the cost of production for India’s producers and have the potential to distort the market in which imported products compete.
• In addition, producers of 25 agricultural products benefit from the government’s Minimum Support Price (MSP) program. From 2018 to present, several WTO Members have submitted seven counter notifications against India’s MSP program.
• India implements a public stockholding program. It remains controversial because the government procures food grains and other commodities at guaranteed supported prices through MSP programs rather than at market prices.

Other barriers

• There exists a lack of transparency affecting new and proposed laws and regulations, including lack of uniform notice and comment procedures and inconsistent notification of these measures to the WTO.

We trust you will find this an interesting read. For any queries or comments on this update, please feel free to contact us at insights@elp-in.com or write to our authors:

Sanjay Notani, Partner – SanjayNotani@elp-in.com
Parthsarathi Jha, Partner – ParthJha@elp-in.com
Ambarish Sathianathan, Partner – AmbarishSathianathan@elp-in.com

[1] ‘USTR Releases 2025 National Trade Estimate Report’, dated March 31, 2025, available at URL: https://ustr.gov/about/policy-offices/press-office/press-releases/2025/march/ustr-releases-2025-national-trade-estimate-report (accessed on April 3, 2025)
[2] ‘ Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits’, dated April 2, 2025, available at URL:  https://www.whitehouse.gov/presidential-actions/2025/04/regulating-imports-with-a-reciprocal-tariff-to-rectify-trade-practices-that-contribute-to-large-and-persistent-annual-united-states-goods-trade-deficits/ (accessed on April 3, 2025)
[3] ‘Fact Sheet: President Donald J. Trump Declares National Emergency to Increase our Competitive Edge, Protect our Sovereignty, and Strengthen our National and Economic Security’, dated April 2, 2025, available at URL: https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-president-donald-j-trump-declares-national-emergency-to-increase-our-competitive-edge-protect-our-sovereignty-and-strengthen-our-national-and-economic-security/ (accessed April 3, 2025)
[4] ‘Fact Sheet: President Donald J. Trump Declares National Emergency to Increase our Competitive Edge, Protect our Sovereignty, and Strengthen our National and Economic Security’, dated April 2, 2025, available at URL: https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-president-donald-j-trump-declares-national-emergency-to-increase-our-competitive-edge-protect-our-sovereignty-and-strengthen-our-national-and-economic-security/ (accessed April 3, 2025)
[5] ‘India-U.S. Trade Talks in New Delhi Concludes’, dated March 29, 2025, available at URL: https://pib.gov.in/PressReleasePage.aspx?PRID=2116613 (accessed on April 3, 2025)
[6] ‘With Prime Minister’s Office push, India finalises terms for US trade deal’, dated April 2, 2025, available at URL: https://indianexpress.com/article/business/economy/india-finalises-us-trade-deal-terms-trump-says-delhi-dropping-tariffs-9919140/ (accessed on April 3, 2025).