First Phase Of India–US Trade Agreement Expected By March

Union Minister of Commerce and Industry Piyush Goyal said that the first phase of the India–US bilateral trade agreement may be signed by mid-March. He added that a joint statement from both countries will be released within the next four to five days.

Tariff Changes After Joint Statement

  • The minister stated that the United States will start an 18% tariff on Indian products after one or two days following the joint statement signing. The implementation will occur through an executive order. The United States currently enforces a 25% retaliatory tariff on Indian products. The total tariff reaches 50% because India faces an extra 25% tariff which results from its Russian oil purchases.
  • Commerce Secretary Rajesh Agarwal stated that India’s tariff reductions on US goods will take effect only after the legal agreement is formally completed.

No Investment Component in the Agreement

  • Goyal explained that the official draft for the agreement still needs development work which will require more than one month to reach completion. The March signing will occur because of this requirement. He confirmed that the agreement contains no provisions related to investment matters.
  • The minister indicated that Indian products will face additional tariff reductions after the legal agreement reaches its complete implementation.

Rising Aircraft Demand and US Imports

India has a growing demand for aircraft. Indian companies have already placed orders with Boeing. The companies expect to make additional aircraft orders which will total between $70 and $80 billion. The total aircraft expenditures will reach approximately $100 billion when including engine and spare parts costs which equals about ₹9 lakh crore.

US to Account for 25% of India’s Imports

  • India’s current global imports are valued at $300 billion, or ₹27 lakh crore. This figure is expected to rise to $2 trillion, or ₹180 lakh crore, over the next five years. During this period, India plans to import oil, LPG, LNG, aircraft, ICT products, and data center equipment from the United States.
  • The total value of imports from the US is estimated at $500 billion. This means that about 25% of India’s total imports will come from the United States.