The much-awaited India-US trade deal, which is key to resolving the stand-off between the two counties after Washington’s unilateral hiking of tariffs on Indian goods, may be around the corner. What seems to have come as a breakthrough in the protracted bilateral talks for the deal is the Indian government’s decision to accommodate the US demand for greater access to its markets, with a higher degree of flexibility that it showed earlier, and include a few farm goods in the tariff lines to be relaxed.
India’s Forward-Leaning Stance
US Trade Representative Jamieson Greer told the Congress that his country received an offer from India that was “the best we’ve ever received as a country,” and that the Indian side had been “quite forward leaning.” The USTR’s comments came, as a team led by his deputy Rick Switzer is in India to take forward the dialogue.
“There is resistance in India to certain row crops and meat and products. They have been very difficult to crack…The kind of offers that (they) have been talking to us have been the best we have ever received as a country, so I think that (India) is a viable alternate market,” Greer said, while testifying before the Senate Appropriations Committee.
The US is facing barriers in many markets for its agriculture commodities. Row crops in the US refer to major field crops like corn, soybeans, wheat and cotton, all grown in distinct rows in that country to allow for mechanised planting, cultivation and harvesting.
While India and the US discuss tariffs and non-tariff barriers as part of the trade deal, the Indian side has maintained it would not compromise on the interests of its smallholder farmers, the dairy industry, fisheries and small manufacturers.
On Wednesday, Switzer’s team began two-day talks with Indian officials for a Bilateral Trade Agreement and an interim deal that will see reduction in the 50% additional tariff on India. Commerce Secretary Rajesh Agrawal met with Switzer. The talks will continue today. “There has been continuous progress in talks,” commerce minister Piyush Goyal said Wednesday.
“The two sides exchanged views on matters related to India-US trade and economic ties, including on the ongoing negotiations on mutually beneficial BTA,” officials said. The last round of physical meetings for a trade deal between the two sides were held in October.
Assistant USTR Brendan Lynch who is Assistant USTR for South and Central Asia and chief negotiator of BTA is also be part of the delegation that is here. Switzer serves as the lead of the US negotiating team for the BTA while Lynch is the chief negotiator. In US political hierarchy Switzer has a higher rank.
In February India and the US decided to complete negotiations on an interim BTA by the fall of this year. By March they had finalised the Terms of Reference of the agreement. However, later the US slapped 50% additional tariffs on India – 25% for addressing its trade deficit and 25% for buying Russian oil.
Urgency to Resolve 50% Additional Tariffs
Now, the discussions on dealing with these additional tariffs have gained urgency over a traditional trade agreement though talks on both these issues are going on simultaneously. The deal on additional tariffs will be in the nature of an initial pact which will then be a launchpad for a more ambitious BTA.
The additional tariffs have led to sharp decline in the Indian shipments to the US of traditional goods like clothing, marine products, engineering goods and leather. Overall merchandise exports to the US fell 8.59% on year to $ 6.30 billion.
The exporters are waiting for an early conclusion of the deal as the US is India’s biggest export market. The US goods and services trade with India totaled an estimated $212.3 billion in 2024, up 8.3 percent ($16.3 billion) from 2023, according to the office of US Trade Representative. India’s goods exports to the US stood at $ 87.3 billion and imports were $41.5 billion. Total services trade was at an estimated $83.4 billion in 2024. India exported $ 41,6 billion services to the US and imported $41.8 billion.
