A question mark on concessions

Reduced reciprocal tariffs should provide cheer to Indian exporters, but the deal will remain predictable only as long as Trump doesn’t slap additional illegal tariffs

- ABHIJIT DAS

THE ANNOUNCEMENT BY President Donald Trump that the US will reduce the reciprocal tariffs on India from 25 % to 18%, and its confirmation by Prime Minister Narendra Modi, marks a significant step forward in India-US bilateral partnership.

Compared to most of its competitors who continue to face slightly higher reciprocal tariffs, the trade deal will reduce the disadvantage being suffered by India’s exports of textiles, leather, gems and jew-ellery, etc. to the US market. This should bring considerable cheer to these sectors, especially the labour employed in them.

As with any agreement, the India-US trade deal is expected to involve trade-offs, with both parties extending concessions to each other. It is, therefore, important to discuss the concessions that the US may have wrested from India and their implications. President Trump has mentioned the following three important concessions made by India: first, reducing tariffs and non-tariff barriers against the US to zero; second, purchasing over $500 billion worth of US energy, technology, agricultural, coal, and other products; and third, India agreeing to stop buying Russian oil and instead buy more energy from the US and potentially Venezuela. India has not confirmed these concessions. While we await the final text of the India-US trade deal to get the details, what should be some of the main points to lookout for?