What India can expect from the US trade deal

The biggest gain is in terms of sentiment. The deal can serve as an insurance against any backtracking by the Trump administration, while keeping alive the prospects of further lowering of US tariffs on Indian exports. It can also help India become a part of US-led global value chains

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There is a promise that tariffs can go lower than 18% in the course of negotiations. This gives agency to India to try and improve the terms of the deal and not be wedded to it even if Trump kills it.

(AFP)

Less than a week after the announcement of a trade deal in principle, India and the US have issued a joint statement that gives more details about what exactly has been agreed upon. Some details will require more clarification, and some items have been left for future negotiations. But here are the key takeaways from Saturday's announcements.

What has India given for the deal to happen?

Russian oil purchases are still a big no: 25% of the existing 50% US tariffs on India were on account of the latter’s Russian oil purchase. It was both unfair and inconsistent. The former because the Joe Biden administration that preceded the current Donald Trump administration in the US was fine with India buying Russian crude to prevent an oil market disruption and the latter because bigger buyers of Russian oil such as China were not slapped with this tariff. India always had the option of declaring an end to Russian oil purchases and getting tariffs back to 25% from 50%. An executive order signed by Trump on Saturday and issued with the joint statement makes it clear that the 25% additional tariffs are only being revoked because “India has committed to stop directly or indirectly importing Russian Federation oil, has represented that it will purchase United States energy products from the United States, and has recently committed to a framework with the United States to expand defense cooperation over the next 10 years”.