American negotiators have assured India of a comparative tariff advantage over its rival economies under a proposed bilateral trade pact, according to a senior government official. Discussions to finalize the initial phase of this agreement are currently underway, with both nations aiming to conclude the first tranche by the end of the current financial year.
While the broader Bilateral Trade Agreement (BTA) remains under negotiation, officials clarified that service-related issues will not be part of the initial package. Instead, these matters are slated for inclusion in the second tranche of the broader agreement. The final framework is expected to take the form of a legal text with annexures, featuring a dedicated chapter on customs and trade facilitation.
A recent round of talks held during the first week of November resulted in the resolution of several portions of the customs and trade facilitation chapter. A two-member US team visited India on November 2-3 to conduct these discussions. According to the official, the legal text will include provisions to ensure the US does not impose additional tariffs following the signing of the deal. In the event of future tariffs exceeding current commitments, the official noted that India reserves the right to modify its concessions.
The clarity of the final tariff structure remains dependent on the findings of an ongoing investigation by the United States Trade Representative (USTR) regarding industrial overcapacity. India is among 14 countries, including Japan, Australia, and the European Union, that have acknowledged the challenges posed by structural excess capacity in global production.
Key facts
- The US has provided assurances of a comparative tariff advantage over India's competitors in the trade deal.
- Negotiations for the first tranche are expected to conclude by the end of the current financial year.
- A two-member US team visited India for trade discussions on November 2-3.
- Service-related issues are excluded from the initial package and moved to the second tranche of the BTA.
- India reserves the right to modify concessions if future US tariffs exceed agreed commitments.
Background
Earlier this year, the US imposed a 10% tariff on Indian goods in June, following a previous investigation into forced labor practices. This action occurred against the backdrop of changing tariff architectures and US midterm elections held on November 3. Commerce and Industry Minister Piyush Goyal previously stated that India will not permit imports of genetically modified products or dairy items produced using calf meat, which the US has identified as non-tariff barriers.
Source: Times of India, Indian Express
Comments