The government on Monday said that tariff liberalisation in the trade agreement with the US is in line with what has been offered in other free trade agreements and duty reductions in some key categories spread over 10 years. In many of the food items like in-shell almonds, walnuts, pistachios, lentils where tariffs are coming down, the import quotas will apply.
Phased elimination of tariffs over up to ten years has been adopted for certain intermediate products used by India’s food processing industry and sourced from multiple countries.
What does the official statement say?
These include albumins; certain oils such as coconut oil, castor oil and cotton seed oil; hoofmeal; lard; stearin; modified starches; peptones and their derivatives; and plants and parts of plants. “This extended timeline provides adequate adjustment space for domestic stakeholders,” a statement said.
“In line with India’s approach in previous trade agreements, agricultural market access has been structured based on product sensitivity. The offer is categorized into immediate duty elimination, phased elimination (up to 10 years), tariff reduction, margin of preference and tariff rate quota mechanisms,” it added. According to a Goldman Sachs report, 60-70% of India’s US farm imports may face lower or zero tariffs.
What happens to Alcoholic beverages
Alcoholic beverages have been offered under tariff reduction along with minimum import price-based formulations, consistent with India’s approach in other FTAs. The duties on alcoholic beverages are expected to come down to 50% to start with.
Immediate duty elimination has been offered only for select non-sensitive products that are already liberalised under other FTAs, the statement said.
For select sensitive agricultural products, the tariffs will be reduced but they would not be coming down to zero to ensure that a measured level of duty protection continues. Items in this category include plants, olives, pyrethrum and oil cakes.
Certain highly sensitive items have been liberalised under Tariff Rate Quotas (TRQs), where limited quantities are allowed at reduced duties. Products under this category include in-shell almonds, walnuts, pistachios and lentils among others.
Highly sensitive agricultural sectors remain fully protected under a carefully crafted exemption category. These broadly include meat, poultry and dairy products; GM food products; soyameal; maize; cereals; millets such as jawar, bajra, ragi, kodo and amaranth.
Fruits including bananas, strawberries, cherries and citrus fruits; pulses such as green peas, kabuli chana and moong; oilseeds; certain animal feed products; groundnuts; honey; malt and its extracts; non-alcoholic beverages; flour and meals; starch; essential oils; ethanol for fuel; and tobacco are also excluded.
In animal feed also the opening is calibrated while attempting to meet the rising demand for animal feed in India. The quota for Dried Distillers Grains with Solubles (DDGS) has been fixed at 5 lakh tonnes which is just 1% of total consumption.
On Saturday India and the US issued a joint statement on their trade deal that brought down additional tariffs on $ 30.94 billion worth of Indian exports to the US to 18% from 50%. In return for lower duties India has offered lower duties on industrial and some parts of agriculture products to the US. It has also committed to buy of $ 500 billion of American goods in the next five years.
The 25% oil duties that were imposed for buying Russian crude, will be reduced immediately as Executive Order for it has come. The reciprocal duties will be brought down to 18% after the Executive Order to this effect later this week.