India's top officials have conveyed to a parliamentary panel that the current Indo-US trade deal represents the most realistic outcome achievable in today's global economic landscape. During a meeting described as substantive, officials from the Ministry of External Affairs and the Commerce Ministry briefed the Parliamentary Standing Committee on External Affairs, led by Congress MP Shashi Tharoor, on the details of the trade agreement.
Key Points of Discussion
The officials emphasized that the agreement is non-binding and adaptable to evolving needs. Discussions also encompassed critical issues such as India's import of Russian crude oil and the progress surrounding the Chabahar port relief. MPs raised questions about the protection of agriculture and labor-intensive sectors, as well as the predictability and benefits of the trade pact. According to Tharoor, the meeting was "extremely effective," lasting over three hours with strong participation from MPs across different parties. He noted that the bulk of the discussion centered around the India-US interim trade agreement and the broader India-EU trade deal.
Russian Oil Imports
The government has assured the panel that India will continue to procure crude oil from sources offering the best quality at competitive prices, while considering geopolitical factors and avoiding sanctioned entities. This stance underscores India's commitment to its energy security needs amidst a complex global environment.
Interim Agreement
An interim trade agreement with the United States is expected to be finalized by mid-March. This agreement aims to reduce tariffs and ease trade barriers, with the goal of boosting commerce between the two nations. The United States has agreed to cut its reciprocal tariff on India from 25% to 18%. In return, India will reduce or eliminate tariffs on a range of American industrial and agricultural products.
Benefits for India
Under the interim agreement, India stands to benefit from factors such as the reduction of tariffs to 18% from 50%, which will aid exports of textiles, garments, leather, footwear, plastic, rubber products, organic chemicals, home decor, and artisanal goods. The agreement also includes a commitment from India to increase purchases of American products worth over $500 billion across energy, technology, agriculture, and coal.
India has secured "zero-duty access" to a US import market estimated at $46 billion, including exports worth around $1.4 billion in products such as spices, processed foods, fruits, tea, coffee, and essential oils. Additionally, India has obtained "preferential access" to a much larger US import market valued at $160 billion. The marine and seafood sector is also expected to be a major beneficiary, with access to a US import market segment worth $25 billion.
Looking Ahead
Both countries will work towards finalizing the Interim Agreement with a view to concluding a mutually beneficial comprehensive trade agreement (BTA). Negotiations will continue on unresolved issues such as technical standards, services, investment and intellectual property, with the aim of reaching a broader agreement.