India-US Trade Deal To Focus On More Market Access And Cut Duties, Barriers: Jitin Prasada

India and the US are planning to discuss a trade agreement that focuses on increasing market access and reducing import duty and non-tariff barriers. This will lead to the enhancement of supply chain integration.

Minister of State for Commerce and Industry Jitin Prasada conveyed this to the Lok Sabha on Tuesday in a written reply to the Lok Sabha.

He added that as of date, the US hasn't imposed any reciprocal tariffs on India.

On Feb. 13, the US had issued a memorandum on reciprocal trade and tariffs. According to the memorandum, the US Commerce Secretary and United States Trade Representative are to take necessary actions to investigate harm to America from any non-reciprocal trade arrangements adopted by trading partners. Thereafter, they need to provide a report with detailed proposed remedies for each trading partner.

Tariffs are import duties imposed and collected by the government and paid by companies to bring foreign goods into the country.

Prasada also said that India continues to engage with the US to achieve enhancement and broadening of bilateral trade ties in a mutually beneficial and fair manner.

“This is an ongoing exercise and Indian exporters are working towards diversifying trade baskets and export destinations,” he said.

According to Prasada, “Both countries plan to negotiate a mutually beneficial, multi-sector bilateral trade agreement. Both countries would focus on increasing market access, reducing tariff and non-tariff barriers, and enhancing supply chain integration.”

During Prime Minister Narendra Modi’s visit to Washington in February, India and the US announced their commitment to more than double the two-way commerce to $500 billion by 2030.

Both countries had also stated that they will negotiate the first tranche of a mutually beneficial, multi-sector bilateral trade agreement by the fall of 2025, or between the months of September and November 2025.

In 2023, the US-India bilateral trade in goods and services stood at $190.08 billion ($123.89 billion in goods and $66.19 billion in services trade).

That year, India's merchandise exports to the US stood at $83.77 billion, while imports were $40.12 billion, leaving a trade gap of $43.65 billion in favour of India.

During 2021-24, America was India's largest trading partner. The US is one of the few countries with which India has a trade surplus.

On Monday, Commerce Secretary Sunil Barthwal had told a parliamentary panel that negotiations between the two countries are still underway and no agreement on trade tariffs has been reached so far.

Barthwal briefed the Parliamentary Committee on External Affairs on US President Donald Trump's recent claims that India has agreed to reduce its tariffs “way down,” while Foreign Secretary Vikram Misri briefed the committee on China and Europe.

In 2023-24, India exported engineering goods worth $17.62 billion to the US.

The other major goods included electronics ($10 billion), gems and jewellery ($9.9 billion), petroleum products ($5.83 billion), textiles ($4.7 billion), and marine products ($2.5 billion).

In a separate reply, the minister said India's tariff policy aims to regulate trade, protect domestic industries, and generate revenue through taxes on imported and exported goods.

“Recent reforms have focused on streamlining the tariff structure and facilitating trade,” Prasada said.

India is a member of the World Trade Organisation and bound to its maximum tariff that can be applied on a product category. The applied tariffs are generally below the bound tariff for a given commodity line.

“With the changing trade scenario, India is moving towards having Preferential/Free Trade Agreements wherein customs tariffs and non-tariff barriers are reduced or eliminated on substantial trade between the PTA/FTA members,” he added.

At present, India is a member of 13 FTAs and nine PTAs apart from the negotiations with the EU, the UK, and Oman.

—With PTI inputs