The ongoing talks between India and the US for the proposed trade agreement between India and the US are progressing “well” and will be for the “good” of both nations while protecting India’s interests, Commerce and industry Minister Piyush Goyal said on Thursday. Goyal also said that he is in regular and constant dialogue with the industry from different sectors including agriculture, engineering, electronics, textiles, and various interest groups.
When asked whether Indian industry should tighten its seat belt and whether there will be any turbulence on April 2, the commerce minister said the India growth story will be intact and the country will continue to power the global economy.
These remarks assume significance as US President Donald Trump has announced imposing reciprocal tariffs in April on America’s key trading partners including India. He has on multiple forums stated that India imposes high tariffs on US goods. The US has already imposed duties on China.
Besides, higher import duties of 25 per cent are imposed on steel and aluminium from March 12. On March 26, Trump announced a sweeping 25 per cent tariff on completely built vehicles (CBUs) and auto parts, a move set to take effect on April 3.
Tariffs are import duties imposed and collected by the government and paid by the companies to bring foreign goods into a country. A team of US officials, headed by Assistant US Trade Representative for South and Central Asia Brendan Lynch, is here for negotiations on the proposed bilateral trade agreement. The three-day talks will end on Friday.
India and the US are aiming to conclude the first phase or tranche of the agreement by the fall of 2025 (September-October). They have also set a target to more than double the bilateral trade to USD 500 billion by 2030 from the current over USD 190 billion.
While the US has demanded greater market access in sectors like certain industrial goods, automobiles, wines, petrochemical products and some agriculture items, India may look at duty cuts for labour intensive sectors like textiles.
In 2024, India’s maine US incl exports to thuded drug formulations, biological (USD 8.1 billion), telecom instruments (USD 6.5 billion), precious and semi-precious stones (USD 5.3 billion), petroleum products (USD 4.1 billion), gold and other precious metal jewellery (USD 3.2 billion), ready-made garments of cotton including accessories (USD 2.8 billion), and products of iron and steel (USD 2.7 billion).
Imports included crude oil (USD 4.5 billion), petroleum products (USD 3.6 billion), coal, coke (USD 3.4 billion), cut and polished diamonds (USD 2.6 billion), electric machinery (USD 1.4 billion), aircraft, space crafts and parts (USD 1.3 billion), and gold (USD 1.3 billion).
Indian industry and exporters are seeking exemption from the reciprocal tariffs stating that the duties would hurt them severely. According to them, the uncertainty over the tariffs would hurt businesses.
Amid pressure from the US, India in February reduced import duties on bourbon whiskey from 150 per cent to 100 per cent and lowered tariffs on certain varieties of wines. The duty on wines made from fresh grapes, vermouth, certain other fermented beverages, and unadulterated ethyl alcohol with 80 per cent strength has been reduced to 100 per cent.
The customs duty reduction announced in the Budget on products such as motorcycles and synthetic flavouring essences would also benefit American exports. India has also recently announced the scrapping of the equalisation levy on tech giants like Google.
The US is pushing India to negotiate a large and grand bilateral trade agreement while seeking to open the agriculture sector for American businesses.
The US agri exports to India was USD 1.6 billion in 2024. Key exports include almonds (in shell – USD 868 million); pistachios (USD 121 million), apples (USD 21 million), ethanol (ethyl alcohol – USD 266 million).
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