India is actively seeking a solution to the current tariff issues in its trade talks with the United States, according to Commerce Secretary Rajesh Agrawal. A team of Indian officials is currently in the U.S. to discuss these matters. Agrawal is set to join the team on Thursday, October 16, to further negotiations.
While discussions are ongoing, Agrawal noted that the current U.S. government shutdown makes it an unfavorable time for a formal round of negotiations for a Bilateral Trade Agreement (BTA). Despite this, both sides are exploring ways to move forward. The Commerce Secretary's comments come as India and the U.S. have re-engaged in a bid to negotiate a trade deal by the end of the year.
India is open to increasing energy imports from the U.S., which could help in reaching a mutually beneficial trade agreement. Agrawal stated that India would be "very happy" to increase its energy purchases from the U.S. India is looking for a "win-win solution" that addresses the tariff issue, and is keen to make additional energy purchases of up to $15 billion from Washington. In the past seven to eight years, energy purchases from the U.S. have decreased from $25 billion to around $12-13 billion, indicating a potential for increased purchases.
The U.S. has imposed a 50% tariff on Indian exports, which includes a 25% penalty for India's purchase of crude oil from Russia. The Indian government is seeking the removal of these "secondary tariffs". These tariffs have negatively impacted Indian textiles, gems and jewellery, and leather and footwear industries. Despite the 50% tariffs imposed by the U.S., India's merchandise exports continued to rise in September, and the government remains hopeful of reaching a trade deal with the U.S. at the earliest.
U.S. Ambassador-designate Sergio Gor recently met with Prime Minister Narendra Modi, External Affairs Minister S Jaishankar, and Commerce Secretary Agrawal. Gor's post on X indicated that the Trump administration is also encouraging Indian companies to invest in the U.S.
RBI Governor Sanjay Malhotra stated that the tariffs imposed by the U.S. are not a major concern for India, as it is a domestic-driven economy. However, he acknowledged that an early resolution to the tariff issue would be beneficial. The IMF has warned that the global economy is showing signs of strain from sweeping US tariffs and protectionism.
