India will continue to engage with the US for a trade deal that preserves the comparative advantage it had got against the competing economies in the interim agreement, Commerce and Industry Minister Piyush Goyal said Friday.
Under the interim deal the US had agreed on 18% additional tariffs for Indian imports, which was lower than all competing economies like Bangladesh, Vietnam, Indonesia, Thailand, Pakistan and Cambodia. After the India-US deal, the US Supreme Court invalidated the country-specific tariffs. After the judgement the US has imposed 10% additional tariffs on all imports, which it said would be going up to 15% in near future, thereby removing any tariff advantage India had got.
Tariff Landscape
“India stays committed to engaging for the best possible opportunity which was negotiated with the US to continue to provide us with the best deal in terms of competitive advantage against other emerging economies and developing nations,” Goyal said at the News 18 Rising Bharat Summit.
“Trade deals are about comparative advantage. If everybody is at the same rate, nobody gets a competitive advantage. But if I am lower than somebody else who is a competitor, I have a comparative advantage,” he added.
When asked whether the US Supreme Court judgement gives more negotiating space to India, the minister said the situation is still evolving and India is in dialogue with the US administration to ensure that the best interests of India are protected.
As the US mulls the next set of steps to keep the tariffs up and maintain the deals it has entered into with different countries, both sides remain engaged at the higher levels.
Goyal on Thursday met US Commerce Secretary Howard Lutnick in New Delhi to discuss economic and trade-related matters.
The US-India joint statement on the deal has a provision that in the event of any changes to the agreed upon tariffs of either country, the United States and India agree that the other country may modify its commitments. After the statement the additional tariffs have been struck down and worldwide tariffs have kicked in.
“The joint statement categorically states should the circumstances change the deal would be rebalanced to ensure that the balance of the deal is maintained on both sides,” he added.
Goyal said beyond tariffs also deal was better for India as it had many other elements. “As the situation evolves we are keeping an eye on it. India will have to prepare itself according to the situation.”
Strategic Alignment
He said for India, the US is a very important trading partner and both countries enjoy a very important strategic relationship which encompasses defence, technology and initiatives like Pax Silica that aims to build resilient supply chains in critical emerging technologies.