It’s not the end of the story

TRADE AGREEMENT WITH THE US SHOULDN'T INVITE STRATEGIC COMPLACENCY FOR INDIA

- AMITENDU PALIT

THE OFFICIAL CONFIRMATION of the US and India having finalised a bilateral trade deal comes within a week of India pulling off a free trade agreement (FTA) with the European Union (EU).The timing of the announcement of the US deal, therefore, is significant. It might also be the “Brussels effect” brushing off on Washington!

What does the conclusion of the deal finally bring home?

India’s biggest relief will come from the US tariff cuts. Reciprocal tariffs of 25% on Indian exports will be rolled back to 18%, bringing them on a par with those on most exports from Southeast Asia and East Asia. The additional 25% tariffs on India for buying Russian oil is also expected to be rescinded, bringing further relief for exports to the US market.

India, in return, is expected to purchase large amounts of US exports, especially energy, tech and agricultural products. President Trump’s post on Truth Social suggests such purchases will be of around §500 billion. In addition, as demanded by the US for long, India will significantly reduce its purchase of Russian oil, increase crude purchases from Venezuela, and lower its own trade barriers on domestic sectors of US export interest.

The key interest in the deal now will be in checking its content, especially what India conceded in terms of market access, and what it obtained in return. This will be especially important given the spate of FTAs India has signed recently. There will be great interest in comparing the relative concessions that India has offered in its various FTAs.