Hours after the Trump administration imposed newer tariff regime on India, the Centre said on Thursday that India and the US want to expedite the negotiations for the proposed bilateral trade agreement (BTA) as the two countries are looking at promoting two-way commerce.
In an official statement, the Commerce Ministry said both the countries have decided to hold sector-specific talks from this month to finalise the structure of the agreement. The keenness to expedite the talks came in the backdrop of the USA’s decision to impose additional 27 per cent import duty on Indian goods from April 9.
“Discussions are ongoing between Indian and US trade teams for the expeditious conclusion of a mutually beneficial, multi-sectoral BTA... We remain in touch with the Trump administration on these issues and expect to take them forward in the coming days,” the ministry said.
Minister of State for Finance Pankaj Chaudhary said India is assessing the tariff hike and its impact on the country. “For (Donald) Trump, it’s America first but for Modi, it’s India first. We are assessing the impact of reciprocal tariffs imposed by the US,” he said on the sidelines of an event. Asked about its impact on India, he said assessment is being done.
Congress and other opposition parties attacked Prime Minister Narendra Modi over imposition of 27 per cent reciprocal tariff on India by the US and said it’s time that the government “develop a spine” and start standing up for the country’s interest.
The government said through the agreement, the two countries are looking to increase market access for their goods, cut tariff and non-tariff barriers and deepen supply chain integration.
A team of US officials, headed by Assistant US Trade Representative for South and Central Asia Brendan Lynch, was here last month to finalise the contours and terms of references of the proposed pact, aimed at more than doubling the bilateral trade to USD 500 billion by 2030 from the current USD 191 billion.
Though the two sides have set a deadline to conclude the first phase of the agreement by fall (September-October) of this year, the complex nature of negotiations for a trade pact may extend the process for years.
In a trade pact, two countries either significantly reduce or eliminate customs duties on the maximum number of goods traded between them. They also ease norms to promote trade in services and boost investments. While the US has demanded duty concessions in sectors like certain industrial goods, automobiles, wines, petrochemical products, dairy, agriculture items such as apples, tree nuts, and alfalfa hay; India may look at duty cuts for labour-intensive sectors like textiles.
In 2024, India’s main exports to the US included drug formulations, biological (USD 8.1 billion), telecom instruments (USD 6.5 billion), precious and semi-precious stones (USD 5.3 billion), petroleum products (USD 4.1 billion), gold and other precious metal jewellery (USD 3.2 billion), ready-made garments of cotton including accessories (USD 2.8 billion), and products of iron and steel (USD 2.7 billion).
Imports included crude oil (USD 4.5 billion), petroleum products (USD 3.6 billion), coal, coke (USD 3.4 billion), cut and polished diamonds (USD 2.6 billion), electric machinery (USD 1.4 billion), aircraft, space crafts and parts (USD 1.3 billion), and gold (USD 1.3 billion).
In 2023-24, the US was the largest trading partner of India with USD 119.71 billion bilateral trade in goods (USD 77.51 billion worth of exports, USD 42.19 billion of imports, with USD 35.31 billion trade surplus). India has received USD 67.8 billion in foreign direct investments from America between April 2000 and September 2024.
Leading the charge by the Opposition, Leader of the Opposition in the Lok Sabha Rahul Gandhi said tariffs imposed by the US are going to “completely devastate” the Indian economy, particularly sectors like the auto industry, pharmaceuticals and agriculture. Speaking to reporters in Parliament complex, Congress President Mallikarjun Kharge also took potshots at Prime Minister Modi, saying the imposition of additional tariff on India by the US shows that the US leadership is a businessman and “our customer” fell into his trap.
While Samajwadi Party MP Rajiv Rai took a dig at Modi over imposition of reciprocal tariff and said the country’s “credibility and strength” does not increase by “having one-sided love and calling someone a friend”.
