Washington and New Delhi Close in on Trade Agreement

The United States and India are reportedly on the verge of finalizing a long-awaited bilateral trade agreement that could significantly reduce tariffs on Indian exports to the US. According to sources familiar with the matter, the agreement may bring tariffs down from the current 50% to approximately 15-16%. The deal has been under negotiation for some time, and a final announcement could be made at the ASEAN Summit later this month, during a meeting between U.S. President Donald Trump and Indian Prime Minister Narendra Modi.

The discussions have centered on key areas such as energy and agriculture. As part of the agreement, India is considering gradually reducing its imports of Russian crude oil. Currently, about 34% of India's oil purchases come from Russia. In return, the US is expected to offer concessions on energy trade.

In addition to energy, the trade deal also addresses agricultural products. The two countries are reportedly discussing greater market access for non-genetically modified (non-GM) U.S. corn and soymeal in India. India is reportedly considering raising the quota for importing non-GM maize from the US while keeping the 15% duty unchanged. The current limit is 0.5 million tonnes annually.

While the broad outlines of the deal are in place, some sensitive issues, such as dairy, remain unresolved. India is also advocating for a provision in the agreement that would allow for periodic reviews of tariffs and market access.

If finalized, the agreement could provide substantial tariff relief for India. For the United States, the deal could create a new agricultural export partner amid ongoing trade tensions with China. The agreement could also potentially reshape India's energy sourcing strategy and impacting global oil markets. Tariffs are customs duties levied on imports to give a price advantage to local producers.