Union Commerce and Industry Minister, Piyush Goyal and his Indian delegation are currently engrossed in detailed trade negotiations with the United States. Central to these discussions is India’s objective of achieving a tariff advantage over its global competitors such as Vietnam, Bangladesh and Indonesia, according to sources close to the event.
High on the meeting’s agenda is ironing out areas of disagreement, including punitive tariffs imposed on India, as well as addressing hard lines related to the agricultural sector. The aim is to accelerate the progress of the Bilateral Trade Agreement (BTA) talks between the two nations.
For the third day in a row, negotiations are underway, as reported by an inside observer. However, the United States exhibits no current inclination to lower tariffs beneath the standard import duties level, known as Most Favoured Nation (MFN), for any country.
India, therefore, has set its focus intently on securing a full revocation of the punitive 25% tariff and a slashing of the reciprocal tariffs to a level affording India a significant edge in the US market over its competitors.
Previously, the US had implemented a 25% reciprocal tariff on all goods imported from India, barring certain exceptions, on August 7. Tariffs on goods from competing nations like Vietnam, Bangladesh, Indonesia and the Philippines by contrast hovered around 19-20%.
On August 27, an additional punitive tariff of 25% was administered on Indian goods. This drastic measure was taken in response to India’s decision to purchase oil from Russia, which the US maintains indirectly supports the conflict in Ukraine.
India has since voiced strong opposition, arguing for a reversal of these punitive tariffs. It highlights that its decision to buy Russian oil resulted from economic necessity, market conditions and the fact that both the EU and US continue their own trade with Moscow.
If these punitive tariffs are rolled back, and the reciprocal tariffs are reduced relative to India’s Asian trade rivals, India would carve out a substantial advantage in the lucrative US market. This is the core focus of our BTA negotiations, the source indicated.
India’s Chief Economic Advisor, V Anantha Nageswaran, shared his personal conviction that the US is likely to rescind these penal tariffs on India. He also postulated that reciprocal tariffs could potentially be reduced to a range of 10-15%.
Amid all these negotiations, New Delhi remains resolute in protecting key areas such as agriculture and the dairy sector. Despite external pressure, the Indian administration is reluctant to open its markets for certain items or accept genetically modified soybean and corn imports.
Both economic and political circumstances make it untenable for India to open its markets for some US agricultural products. Similarly, the country does not seem inclined to cut tariffs as steeply as desired by the US on some manufactured goods like automobiles.
The development of these negotiations will determine the schedule for the sixth round of the discussions for the BTA. Swift action is required on both sides to meet the pre-fixed deadline for finalizing the first section of the BTA, decided upon by PM Narendra Modi and US President Donald Trump early this year.
Negotiations between the two formidable nations took place from July 14-17, with the primary focus on preventing the implementation of the aforementioned reciprocal tariffs. Despite the efforts, these discussions ended with no agreement, and the tariffs were enforced.
Recent developments have also introduced new challenges that require attention, such as the increase in the H-1B visa fee and the United States’ decision to withdraw exemptions for Chabahar investments in Iran.
The post India-US Trade Talks: The Quest for Tariff Advantage appeared first on Real News Now.
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