(Image source from: Siasat.com)
The Donald Trump administration has described the new trade agreement between India and the United States as a "groundbreaking" move, indicating that it will provide access to the large Indian market of more than 1.4 billion customers for American goods. The White House has issued a statement outlining the main points of the agreement, which includes the US agreeing to reduce the tariff on goods imported from India from 25 percent to 18 percent. The statement clarified various elements of the agreement, especially regarding President Trump’s assertion that India has consented to eliminate tariffs and other barriers against the United States completely. It also mentioned that Trump will remove the extra 25 percent tariff on Indian goods, recognizing India’s promise to halt buying oil from Russia.
According to the White House, India has committed to "remove or lower tariffs" on a variety of American manufactured items and many US food and agricultural goods, which include dried distillers' grains, red sorghum, nuts, fresh and processed fruits, specific pulses, soybean oil, as well as wines and spirits, among other products. The statement highlighted that India plans to purchase more American goods, aiming to acquire over $500 billion worth of US energy, telecommunications and information technology, agricultural coal, and additional items. It emphasized that India has also agreed to tackle non-tariff barriers that impact trade between the two nations in key sectors. Furthermore, India will abolish its digital services taxes and intends to negotiate a comprehensive set of digital trade agreements that tackle unfair practices and obstacles to digital commerce, including rules that prevent customs duties on electronic transmissions. The statement further added that both the US and India have committed to "discuss rules of origin to ensure that the agreed benefits largely favor both nations. " Both countries are also dedicated to enhancing their economic security collaboration to strengthen supply chain stability and innovation through shared actions in response to non-market policies from third parties. They will also work together on reviewing investments that go in and out of their countries, as well as export restrictions.
The White House announced that the United States and India will greatly boost their trade in technology goods and enhance their cooperation in technology. Trump stated that India has promised to eliminate “Tariffs and Non-Tariff Barriers against the United States, to ZERO. ” Mostly, Trump's wording indicated a basic agreement to reduce or possibly remove taxes on certain American products, rather than an instant abolition of all import taxes. However, the bold nature of the claim caused concern among Indian merchants. This announcement came after a recent phone conversation between President Trump and Indian Prime Minister Narendra Modi, where they established a plan for a temporary trade deal and reiterated their dedication to further negotiations on a broader US-India Bilateral Trade Agreement (BTA). According to the statement, Washington and New Delhi will quickly put this plan into action in the upcoming weeks and aim to finalize the temporary agreement with the goal of achieving a beneficial BTA to secure advantages for American workers and companies.
Following the guidelines laid out in the Terms of Reference for the BTA, the United States and India will keep discussing how to tackle the remaining tax barriers, other non-tax barriers, trade technicalities, customs and trade support, good regulatory practices, trade measures, services and investments, intellectual rights, labor issues, environmental concerns, government purchasing, and unfair practices by state-run enterprises, it further stated.
