The India-US trade deal exempts Indian dairy and “sensitive” agriculture items from its ambit, provides for zero-duty access to over $40 billion worth of Indian goods, and reduces customs duties on labor-intensive Indian merchandise such as textiles, leather goods, marine products, chemicals, and certain agricultural items, including processed food, to 18% from day-one, people aware of the development said on Tuesday.
Elaborating upon the basic contours of the deal announced by President Donald Trump on Monday, the people cited above said the 25% punitive tariff imposed on Indian goods for purchasing Russian oil will be removed in a couple of days. Besides, the 25% reciprocal tariff imposed on goods worth about $30 billion (labour-intensive items) will become 18% days after the deal is formalised through a joint statement, they added, requesting anonymity. They were citing bilateral trade data for the calendar year 2024.
“Indian exporters were struggling to survive in their biggest market against the cheaper labour-intensive products of competing countries such as Bangladesh, Cambodia, Vietnam, Indonesia, China, Malaysia and Thailand because of the huge duty differential. They paid around 19%-20% against Indian exporters being charged 50%. Now, after the deal, Indian exporters will have about 1-2 percentage point duty advantage,” one of them said.
Competing countries have higher import duties in the US market. For instance Vietnam is 20%, Malaysia 19%, Bangladesh 20%, Cambodia 19% and Thailand 19%.
Union commerce and industry minister Piyush Goyal said in New Delhi that the sensitive agriculture and dairy sectors were safeguarded in a deal that will boost labour-intensive and export-oriented sectors. “This is truly a deal that every Indian can be proud of,” he added.
US Trade Representative Jamieson Greer said in an interview that India had agreed to reduce tariffs on US exports and that India’s industrial goods tariffs will go to zero from 13.5%. “India is maintaining some protection around agricultural goods,” he told CNBC in the interview.
The developments came a day after Prime Minister Narendra Modi announced that Indian goods will face a reduced US tariff of 18% after a phone conversation with Trump, who said the two sides had concluded a trade deal whereby New Delhi will cut its tariffs to zero and buy American goods, including energy, worth more than $500 billion.
The announcement concluded nearly 12 months of tense negotiations that saw bilateral ties nosedive.
India’s labour-intensive sectors were the worst hit by the US tariffs that were the highest (50%) among competing countries. The sectors mainly comprised textiles and apparels, leather and footwear, marine products, chemicals, plastic, rubber, home decor, carpets, machinery, certain agri items, and processed agriculture products, the people cited above said.
According to them, the governments of both sides are finalising a joint statement, which will formalise the contours of the deal. Subsequently, the two sides will seal the deal after legal scrubbing. “Most of the provisions of the deal will come into force after the joint statement. Some of them could have certain specific timelines,” a second person said adding that the deal has already been negotiated in a structured manner, so it will be implemented expeditiously.
Indian government officials declined to comment on specific details of the deal before the formal joint statement as there could be some last-minute adjustments. They said, requesting anonymity, that the joint statement will formalise the understanding arrived at after lengthy negotiations.
Both Goyal and Greer separately hinted that the final language of the deal was yet to be firmed up.
“We will be shortly issuing a joint statement by both countries, along with the details which we will be shortly inking between the United States of America and India. And as soon as the final understanding of the deal is inked and the joint statement is finalised, technical processes are completed, full details will be shared,” Goyal said in Delhi.
“But I can assure the people of India, I can assure 140 crore brothers and sisters, that this is a deal that will make every Indian proud, that will protect the interest of every Indian, and provide huge opportunities for all the people of India, and will protect the sensitive sectors, the interests of our agriculture and our dairy sectors in full respect, opening up huge opportunities for our labor-intensive sectors, export sectors in textiles, plastics, apparel, home decor, leather and footwear, gems and jewelry, organic chemicals, rubber goods, machineries, so many products, aircraft components,” he said.
Article source: hindustantimes.com
