Rama Krishna Sangem
Uncertainty prevails over mini India-US trade deal. A breakthrough is unlikely in talks between the two countries for the deal before July 9, a deadline for President Trump’s reciprocal tariffs to kick in. Now Trump says enhanced reciprocal tariffs will commence from August 1, for all the countries which failed to sign a deal with the US before July 9.
Our commerce minister Piyush Goyal who just returned from Washington DC after rounds of negotiations for the mini deal said that India will not sign agreements under the threat of deadlines. That means, India is not going to seal a deal with America, unless concerns were addressed.
What sources say is that the US is insisting on wiping out its goods trade deficit with India – around 45.7 billion US dollars. At the same time, it wants to retain its services surplus of around 40 billion US dollars with India. That means India will be a net loser in trade with America. This is not acceptable to India.
Another area where there has been a stalemate in the talks for a mini-trade deal is American negotiators pressing for opening up of Indian markets for their dairy & poultry, agriculture and horticultural products. India currently wants to protect its farm and allied sectors for some time as it would harm local employment and food security. Already, India has reduced tariffs on certain automobiles like bikes and California almonds etc.
India-US BTA by October
India is planning to sign a bilateral trade agreement (BTA) with the US by October when President Trump will come to Delhi for Quad summit. Originally, India wanted to sort out all pending issues with the US in the BTA, but Trump’s reciprocal tariffs announced in April first week have scuttled the plan and created a compelling need to go for a mini-trade deal by July 9. This deadline is to escape from reciprocal tariffs up to 26 per cent Trump imposed on India.
Anyway, there is a baseline tariff of 10 per cent on all Indian goods imported into the US. If there is no mini-deal, the US will impose additional tariff around 16 per cent on all Indian goods. India is getting ready to bear this burden, instead of buckling down for slashing tariffs on all US imports that may threaten local industries and agricultural product. India has almost made up its mind to impose retaliatory tariffs on US automobile parts, in case that country goes for higher tariffs on our exports of the same category.
