India, US engaged in talks on bilateral trade pact, says Commerce ministry

India and the US remain engaged in discussions for a mutually beneficial bilateral trade agreement, the commerce ministry said on Friday.

Chief negotiators of the two countries were scheduled to meet last month in Washington to finalise the legal text for the first phase of the bilateral trade agreement, but it was agreed to be postponed following a decision of the US Supreme Court striking down sweeping tariffs of the American administration.

The ministry has denied reports about a hold off on bilateral engagement.

“We have noted a media report regarding ongoing trade talks with the US. It is denied that there is any hold off in bilateral engagement. It is reiterated that the two sides remain engaged for a mutually beneficial trade agreement,” the commerce ministry said in a statement.

The remarks came after the United States Trade Representative (USTR) on March 11 launched a fresh round of Section 301 trade investigations targeting policies and industrial practices of 16 economies, including India and China. Following the US Supreme Court’s ruling, President Donald Trump announced 10 per cent tariffs on all countries for 150 days from February 24. And now the US has announced these investigations.

An official clarified that at no point in time have the two sides ever stated that the trade talks have stopped or “we are not doing an agreement”.

Some countries, such as Bangladesh, Malaysia, and Cambodia, have signed trade deals with America, but some others have only finalised and not inked the legal text. India and the US have finalised the contours of the first phase of the trade pact. “Every country is watching how the overall scenario of tariffs is in the US. The chief negotiators of India and the US have spoken at least 4-5 times since this (West Asia) crisis, and virtual sessions are also happening.

“There is no breakdown of talks. We are discussing. We are trying to see that we keep the agreement ready, but signing of the agreement will only happen at an opportune time, because this agreement, as you all are aware, is based on comparative advantage, preferential access to the US market,” the official added.

The US tariffs are not going away; they will be calibrated and placed at a level where India is going to get a comparative advantage vis-a-vis its competitors in the US market, another official said.

Before the US Supreme Court ruling, the Trump administration had announced in a joint statement to reduce tariffs on India to 18 per cent from 50 per cent. The tariffs at that time on India were among the lowest compared to its competitor nations, such as China, Thailand, Bangladesh, Indonesia, and Vietnam.

“So, since their side of the deal is not clear, there cannot be any signing ceremony right now. But the deal is there, and the design structure and the position of the deal are there,” the official said.

The US had announced that it would reinstate the tariffs, which were set aside by the court. Initiation of Section 301 investigations by the US against 16 economies is a step in that direction.

“So, their intent is very clear. Now, what actions follow we have to see and based on that, we will have to take the next steps,” the official added.

At present, there are no reciprocal tariffs. The 10 per cent levies are for all countries for 150 days.

“The basket of goods and services that India supplies to the US...we are in a good zone,” the official added.

During the April-January period of this fiscal year, the country’s exports to the US increased 5.85 per cent to $72.46 billion, while imports rose 13.87 per cent to $43.92 billion.