What’s at Stake in the Ongoing India-US Trade Negotiations?
Current Status of India-US Trade Talks
Negotiations for an interim trade agreement between India and the United States are ongoing, with both sides maintaining firm positions on key issues. Sources indicate that India will not compromise on duty concessions related to agricultural products, dairy, and genetically modified (GM) items.
The two nations are working towards finalizing a bilateral trade agreement (BTA), aiming to complete the initial phase by the fall of this year, specifically between October and November.
Discussions are also focused on establishing an interim trade deal prior to the completion of the first phase.
Continuous engagement is reported between the two countries, although India has set clear boundaries regarding agriculture, dairy, and GM products.
Due to the use of animal feed in the US dairy industry, India finds it unfeasible to offer duty concessions on these goods.
Historically, India has not granted duty concessions in this sector in previous trade agreements.
Religious sentiments surrounding dairy products further complicate the issue, making it unacceptable for India to compromise in these areas.
Commerce and Industry Minister Piyush Goyal emphasized in Parliament that India will take all necessary measures to protect its national interests.
He mentioned that the government is assessing the impact of tariffs and consulting with stakeholders, including exporters and industry representatives, to gather insights.
Since March, India and the US have been engaged in negotiations for a bilateral trade agreement, completing five rounds of discussions so far.
The sixth round is scheduled to take place on August 25.
The chief negotiator for India, Rajesh Agrawal, along with Brendan Lynch, the Assistant US Trade Representative for South and Central Asia, are leading the talks.
In a significant move, US President Donald Trump announced new tariffs affecting numerous countries, including a 25% duty on goods from India, which has raised concerns about escalating protectionism and potential disruptions in global trade. These tariffs are set to take effect on August 7.
In the fiscal year 2024-25, India recorded a trade surplus of USD 41 billion with the US, up from USD 35.32 billion in 2023-24 and USD 27.7 billion in 2022-23.
India's primary exports to the US in 2024 included pharmaceuticals (USD 8.1 billion), telecom equipment (USD 6.5 billion), precious stones (USD 5.3 billion), and petroleum products (USD 4.1 billion), among others.
On the import side, India brought in crude oil (USD 4.5 billion), petroleum products (USD 3.6 billion), and electric machinery (USD 1.4 billion).
India is advocating for the removal of the additional tariffs and is also seeking reductions on steel and aluminum tariffs (50%) and auto sector tariffs (25%). These matters are crucial in the ongoing trade negotiations.
India reserves the right to impose retaliatory duties under WTO regulations.
Additionally, India is pursuing duty concessions for labor-intensive sectors such as textiles, gems and jewelry, leather goods, and agricultural products in the proposed trade agreement.
Conversely, the US is requesting duty concessions on various industrial goods, including automobiles, especially electric vehicles, wines, and dairy products.
In the April-June quarter of this financial year, India's merchandise exports to the US surged by 22.8% to USD 25.51 billion, while imports increased by 11.68% to USD 12.86 billion.