New Delhi: Import duty concessions in labor-intensive sectors like leather, textiles, and jewelry under the proposed bilateral trade agreement between India and the US will help boost exports to America, according to experts.
In exchange for this, the US might seek duty cuts in areas like petrochemical products, electronics, medical equipment, and certain agricultural items, such as almonds and cranberry, they added.
However, duty cuts in agri items like apples and soya could be difficult, given the sensitivities.
During the recent visit of Prime Minister Narendra Modi to Washington, India, and the US announced their commitment to more than double the two-way commerce to USD 500 billion by 2030 and negotiate the first tranche of a mutually beneficial, multi-sector Bilateral Trade Agreement (BTA) by fall of 2025.
Commerce and Industry Minister Piyush Goyal has been in Washington since Monday for the trade talks with US Trade Representative (USTR) Jamieson Greer and US Commerce Secretary Howard Lutnick.
The minister is expected to return on Saturday.
“India may gain in sectors like auto components, apparel, footwear, jewelry, plastics, and smartphones if the US cuts tariffs in the proposed agreement. Indian goods in these segments can compete with China in the US market as Chinese goods are facing high tariffs in the US market,” one of the international trade experts said.
He said that certain goods from China face tariffs as high as 45 per cent in the US market and in these segments, India can increase production and seize the opportunities.
Tariffs are import duties imposed and collected by the government and paid by the companies to bring foreign goods into the country.
The trade talks between the two countries may gain momentum as US President Donald Trump has announced that reciprocal tariffs on countries imposing high duties on American goods will take effect on April 2.
On multiple times, Trump has alleged that the high tariffs charged by India and other countries, including China, are very unfair.
International trade expert Biswajit Dhar said it would be “very” difficult for officials of both countries to finalise the agreement.
Dhar said the US may demand duty cuts in agri goods like soya and maize, high-end bikes, passenger cars, and electric vehicles.
“The US’ main issue is to balance the trade gap with India, and for that, they want to increase their exports in Indian markets,” he added.
Pharma setor exporters said that any decision by the US to impose reciprocal tariffs on Indian pharmaceutical exports would mainly impact American consumers, although the domestic industry remains cautiously optimistic.
During his first term as the US president, Trump described India as a tariff king and in May 2019, terminated India’s preferential market access — Generalised System of Preferences (GSP) — to the US, alleging India has not given the US equitable and reasonable access to its markets.
Economic think tank GTRI has suggested that India should propose a ‘zero-for-zero’ tariff strategy to the US to address America’s proposed reciprocal tariff hikes, as it would be less harmful than negotiating a full bilateral trade agreement.
Under this strategy, the Global Trade Research Initiative (GTRI) has recommended India identify tariff lines (or product categories) where India can eliminate import duties for American imports without harming domestic industries and agriculture.
In lieu of that, the US should also remove duties on a similar number of goods.
Indian farm exports to the US currently face a 5.3 percent tariff, whereas US farm exports to India face a much higher 37.7 percent import duty. On the other hand, for industrial products, Washington’s exports to New Delhi face a 5.9 percent weighted average tariff, while Indian industrial exports to the US face only 2.6 percent duty.
During the first term of Trump, the two countries discussed a mini-trade deal, but it was shelved by the Joe Biden administration as they were not in favour of such pacts.
In 2023, the US-India bilateral trade in goods and services stood at USD 190.08 billion (USD 123.89 billion in goods and USD 66.19 billion in services trade). That year, India’s merchandise exports to the US stood at USD 83.77 billion, while imports were USD 40.12 billion, leaving a trade gap of USD 43.65 billion in favour of India.
The country’s services export to America was USD 36.33 billion in 2023, while imports stood at USD 29.86 billion. The trade gap (the difference between imports and exports) was USD 6.47 billion in favour of New Delhi.
During 2021-24, America was India’s largest trading partner. The US is one of the few countries with which India has a trade surplus.
In 2023-24, the US remained India’s largest trading partner with USD 119.71 billion in bilateral trade in goods (USD 77.51 billion worth of exports, USD 42.19 billion of imports — USD 35.31 billion trade surplus).
India received USD 67.8 billion in foreign direct investments from America between April 2000 and September 2024.
