Commerce and industry minister Piyush Goyal on Tuesday said India and the US could offer tariff reductions and other concessions to each other under a bilateral trade deal being planned. Whether the agreement will encompass both trade in good and services, and other areas like investments, as is typical of free trade agreements (FTAs), or a less ambitious one, would be decided during the talks to be held between the two sides, he said.
The minister aid while India’s import tariffs may be higher than some other countries and designed to protect domestic industry from imports from non-market economies, the situation with the US is very different. “We (India and the US) complement each other. We can give mutual concessions to each other, like tariff reductions and make it easier to export and import,” the minister said at an event here.
India and the US agreed during Prime Minister Narendra Modi’s visit to Washington last week that the first tranche of the multi-sector bilateral trade agreement (BTA) will be finalised by fall or in next eight to nine months. The BTA aims to enhance the overall trade between the two sides to $ 500 billion in 2030 from $ 200 billion at present. The agreement on a trade pact came after the US President Donald Trump announced a major overhaul of US tariff policies that threatened to put substantial barriers to exports to the US.
To show its willingness to consider lowering import duties, in next financial year’s budget India announced a reduction of duties on cars costing more than $ 40,000 and used cars from 125% to 70%. On motorcycles and used motorcycles the duty has come down to 70% from 100%. The duties on a variety of whiskey made in the US – bourbon whiskey – has been reduced to 50% from 150%.
The government has started working on different ideas and opened discussions with stakeholders within and outside the government to prepare for the negotiations on the BTA, the minister said.
“This (BTA) is an opportunity for India to expand trade with the US. We look at this opportunity as a way to make India more competitive, come out with quality products, look at mutual concessions and attractive trading conditions which will support growth both in America and in India,” he said.
The minister hoped that the discussions on the agreement will start soon. He said the exact nature of the agreement – whether it will be a traditional free trade agreement or a limited pact – would be known after the two sides start engaging.
“My counterpart has not yet been confirmed in the US…After the (confirmation), we will do talks and then only we can decide the way forward,” Goyal said earlier on the sidelines of a India-Qatar Business Meet organised by CII.
Goyal said there should be no cause of concern to the industry from the trade negotiations with the US. “We should enter these negotiations from a position of strength, boldly be willing to compete with the US. I do see any cause for concern. It is a golden opportunity for business and will open the floodgates of new business opportunities.”
US is India’s most important trading partner and the only major economy with which it has a trade surplus.
In 2023, the US and India bilateral trade in goods and services stood at $ 190.08 billion – $ 123.89 billion in goods and $ 66.19 billion in services. During 2023-24, America was the largest trading partner of India with merchandise trade of $ 119.7 billion with India’s exports at $ 77.5 billion and imports at $ 42.1 billion.