Trade Agreement to be Finalized Shortly
India and the United States are on the verge of signing a new trade agreement. It has been reported that tariffs which are currently 50 percent could be cut down to 15–16 percent after signing the deal. This was stated by an English media report quoting dependable sources.
Chief Economic Advisor V. Ananth Nageswaran said he hopes that both nations will agree soon. He added that he is not privy to any information but feels the deal might be finalized in the next two months or even sooner. In his view, after the pact is signed, the additional 25 percent tariffs that were imposed initially might be lifted. He also intimated that retaliatory tariffs might go down from 25 percent to perhaps 10–15 percent. Nageswaran further added that such changes might be implemented before November 30.
Background of the Tariffs
At the beginning of this year, the US government led by former President Donald Trump levied a 25 percent retaliatory tariff against India. Subsequently, another 25 percent tariff was imposed, blaming India for its continued import of Russian oil. Indian exports to the US thus now attract an overall tariff of 50 percent. For months, negotiations have been taking place to lower these tariffs and enhance bilateral trade ties.
Major Issues in Negotiations
Two issues have held up the negotiations — agricultural commodities and energy imports. The US has been pressuring India to liberalize its market for US agricultural products. India has held firm against this insistence, and discussions have made little progress.
A second area of dispute is India's continuing oil imports from Russia. The US has criticized such acquisitions. Recently, however, reports suggest that the two might have struck a balance. India is said to be considering a phased roll-off of oil imports from Russia.
Energy and Agricultural Trade Outlook
Russia currently provides around 34 percent of India's crude oil imports, and the US provides around 10 percent. Reports indicate that India is planning to permit limited imports of American corn and soybean meal soon. This is likely to be good for both countries, particularly as China has cut its imports of corn from the US due to its own trade disputes.
Even when India ramps up imports of corn from the US, it will continue with the existing 15 percent duty on imports of corn.
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