However, if an agreement is reached quickly on widening the coverage, the initial deal could take the shape of a preferential trade agreement, amounting to a much higher value of annual trade.
A “limited” India-US trade deal that has been in the works for months is “nearly ready” and can be “finalised at any time”, commerce and industry minister Piyush Goyal said on Tuesday.
Speaking at a virtual leadership summit of the US-India Starategic Partnership Forum, Goyal said US trade representative Robert Lighthizer and he has agreed that “we can look finalising before the election, but otherwise soon after the election”.
Goyal stressed that it’s going to be a “foundation deal” that will deepen bilateral trade engagement. “India is open to signing tomorrow on what we have agreed on,” he added, indicating India’s readiness to clinch the deal on the points of convergence at the earliest. “India believes that it has to be win-win for both countries, and what we have created, the architecture of the initial deal, is in the best interests of businesses of both countries,” he said.
Sources had earlier told FE that the “limited” deal could cover annual trade of over $13 billion, or roughly 15% of bilateral shipment, which also included a complete restoration of duty benefits for New Delhi under the so-called Generalised System of Preferences (GSP). However, if an agreement is reached quickly on widening the coverage, the initial deal could take the shape of a preferential trade agreement, amounting to a much higher value of annual trade.
India may consider opening up its dairy and poultry sectors partially if it gets a good deal from the US in textiles and garment and pharmaceuticals. In garments, for instance, the US import duties (for India) currently range between 16.5% and 32%. This deal may be followed by talks on a potential free trade agreement (FTA).
As part of the limited deal, India will likely reduce tariffs on high-end bikes like Harley Davidson, pledge greater market access in farm products, including cherry, and sweeten its initial offer on easing price caps in medical equipment, a source had said earlier. India is willing to apply trade margin on coronary stents and knee implants at the first point of sale (price to stockiest), instead of imposing it on the landed prices, as was proposed by it initially, to make it more attractive for American companies like Abbott. India is also willing to resolve certain non-tariff measures, such as certification process for some dairy products and market access in alfalfa hay and pork.
Already, in July, Goyal had suggested that both India and the US could clinch a quick trade deal. “We should be able to get the quick trade deal out of the way after a few more calls. India and the US must sit down to negotiate a robust FTA but before that we can even look at an early harvest trade agreement for 50-100 products,” Goyal had said.
If the US agrees to roll back its extra tariff of 25% on Indian steel and 10% on aluminium, New Delhi will lift retaliatory steps and scrap punitive duties on 29 American goods, including farm items like almond, apple and walnut. This is expected to augur well for the Trump administration before the Presidential elections in November.
The US has been pressing India to abolish/cut “not justified” tariff on motorcycles (50%), automobiles (60%) and alcoholic beverages (150%). It is seeking better trade balance with India through greater market access in agriculture and dairy products.
The “limited deal” was earlier expected to be announced after Prime Minister Narendra Modi’s meeting with American President Donald Trump in New York on September 24 last year. However, differences over certain sticky issues caused the delay.
India’s trade surplus with the US has been shrinking, as it has stated importing oil and gas from the largest economy, something that India has been highlighting.
According to the US government data, New Delhi’s trade surplus with Washington eased to $24.3 billion in 2016 to $23.3 billion in 2019. According to the Indian government data, imports from the US stood at $35.7 billion in FY20, up 0.3% even though overall merchandise imports dropped by 7.8%.