India and US Pursuing Mutually Beneficial Trade Deal

India and the United States are actively working towards finalizing a trade agreement that would be beneficial for both nations by expanding market access, reducing import duties and non-tariff barriers, and strengthening supply chain integration. The commerce ministry provided this update to Parliament on Tuesday.

In a written response to the Lok Sabha, Minister of State for Commerce and Industry Jitin Prasada clarified that while the US has not yet imposed reciprocal tariffs on India, they are expected to take effect on April 2.

"Both countries aim to negotiate a comprehensive, multi-sector Bilateral Trade Agreement, focusing on expanding market access, reducing tariff and non-tariff barriers, and strengthening supply chain cooperation," Prasada stated.

Strengthening Bilateral Trade Relations

Prasada emphasized that India remains committed to engaging with the US to expand and enhance bilateral trade relations in a fair and mutually beneficial manner.

"This is an ongoing process, and Indian exporters are actively working on diversifying trade opportunities and expanding export destinations," he added.

Trade between India and the US has witnessed significant growth in recent years. The US is one of India’s largest trading partners, with total bilateral trade reaching approximately $128.55 billion in 2022-23. India’s exports to the US include pharmaceuticals, textiles, engineering goods, and information technology services, while key imports from the US consist of crude oil, defense equipment, and high-tech products.

As both nations work towards a trade pact, Indian exporters are pushing for better access to the US market, especially in agriculture, textiles, and services. At the same time, American businesses are keen on reducing Indian tariffs on automobiles, agricultural products, and medical devices.

India's Tariff Policy and US Trade Stance

Additionally, Prasada explained that India's tariff policy is designed to regulate trade, safeguard domestic industries, and generate revenue through duties on imports and exports.

"Recent policy reforms have aimed at simplifying the tariff structure and facilitating smoother trade operations," he noted.

The discussions on trade come at a time when the US has been reassessing its trade relationships with key global partners. The US administration has expressed concerns over non-reciprocal trade arrangements, where American goods face higher tariffs in certain markets compared to what the US imposes on those countries.

The US issued a Memorandum on Reciprocal Trade and Tariffs on February 13, 2024, directing the Secretary of Commerce and the US Trade Representative to assess the impact of such trade imbalances and propose corrective measures. This move aligns with Washington’s broader strategy of ensuring a level playing field for American businesses.

India’s Stand on Tariffs

Previously, India clarified that it has not committed to reducing tariffs, refuting claims by former US President Donald Trump that the Modi administration had agreed to lower import duties. India maintains that its tariff policies are aligned with its economic interests and aim to protect domestic manufacturers and small businesses from excessive foreign competition.

At the same time, India has been actively negotiating trade agreements with multiple partners, including the European Union, the United Kingdom, and Australia, to diversify its export markets. Strengthening trade ties with the US is expected to enhance India’s position as a key player in global trade while ensuring that domestic industries remain competitive.

Path Ahead for India-US Trade Talks

While trade negotiations between the two countries continue, analysts believe that certain sectors could see early agreements, particularly in areas like semiconductors, technology transfers, and digital trade. Both nations also aim to deepen cooperation in emerging sectors, such as renewable energy, electric vehicles, and artificial intelligence.

Experts suggest that a balanced trade agreement would not only boost economic ties but also strengthen geopolitical cooperation between the two countries, particularly in the Indo-Pacific region. As India positions itself as an alternative manufacturing hub to China, American companies are showing increased interest in investing in Indian supply chains and manufacturing facilities.

Despite differences on some trade issues, the ongoing dialogue between India and the US reflects a strong commitment to resolving disputes through negotiations. The coming months will be crucial in determining the final structure of the bilateral trade pact and how it shapes future economic engagements between the two nations.