The additional reciprocal tariff by the US on Indian exports need to be addressed for the resumption of negotiations on the Bilateral Trade Agreement (BTA) negotiations, though both sides remain in touch, a senior official said Thursday.
Tariffs a stumbling block for negotiations
“We are hopeful of getting back on the table soon… whenever we strike a deal, both the tariffs (additional reciprocal duty of 25% and another 25% penal levy for purchase of Russian oil) need to be addressed,” the official, who did not wish to be identified, said..
The sixth round of negotiations on the BTA that was scheduled for this week got postponed because amid the additional tariffs it was not practical to have discussions on the entire package. The talks were progressing well, the source added.
“If you do a trade deal and do not get the additional tariffs off it will have no value for exporters,” the official added.
When asked whether India will impose retaliatory duties on the US, he said retaliation and negotiations cannot go hand-in-hand. “Right now, the talks are only postponed, it has not been taken off the table. So, why should we be worried? Retaliation is something which we can do at any point of time”.
Supporting exporters and maintaining national interests
On sectoral duties of 50% on steel and aluminium and 25% on auto sector India has reserved its rights under the World Trade Organisation norms to impose retaliatory duties.
He also said in the engagements that are ongoing both sides are trying to understand each other’s positions and red lines on livelihoods of farmers, cattle rearers and other vulnerable sections from the Indian side remain.
The two countries started negotiations for BTA in March and before the pause five rounds of negotiations had been completed. The deadline for completing the first round of the BTA was the autumn of 2025.
The official admitted that the sectors like textiles, leather, gems and jewellery, leather, machinery and chemicals will see an impact of tariffs on their shipments to the US. The impact will, however, be short-lived and supply chains will realign. To support the exporters, the official said that the Export Promotion Mission (EPM) is being expedited to address the credit concerns of the exporters that are likely to face liquidity pressures in the current situation.
The government is engaging with the exporters to help them tide over the disruption. A delegation of the Federation of Indian Export Organisations (FIEO) led by its President S C Ralhan and other export promotion councils met Finance Minister Nirmala Sitharaman on Thursday to convey the adverse impact of higher tariffs on market access, competitiveness, and employment generation.
They asked for quick and calibrated policy measures to mitigate the strain on India’s exporters, who have been key drivers of growth and job creation.