India-US Trade Negotiations
India and the United States are initiating virtual sector-specific discussions aimed at a new trade agreement. These discussions are designed to pave the way for in-person negotiations on key sectors, with an objective to finalize areas for swift negotiation by the end of May.
Negotiation Strategy
- The discussions will help identify areas that require more time and those that can be concluded quickly.
- Both nations are working under an aggressive schedule to balance mutual trade interests, considering tariff sensitivities and broader economic policies.
Tariff Context
- On April 9, the US paused country-specific reciprocal tariffs for 90 days, excluding China, to mitigate recession and inflation fears.
- India currently faces a 10% ad valorem tariff on exports to the US, above the existing MFN tariff.
- New Delhi may have a 'first-mover advantage' since trade talks were initiated before the tariff pause.
Trade Agreement Timeline
- In February, both countries announced plans to finalize the first tranche of a multi-sectoral bilateral trade agreement (BTA) by fall 2025.
- An interim trade deal is being explored for possible completion by July 9, contingent on ongoing negotiations.
Challenges and Considerations
- There are concerns about completing a deal within 90 days, as stated by Biswajit Dhar, Distinguished Professor at the Council for Social Development.
- India must ensure that its market access and regulations are negotiated bilaterally and not disproportionately disadvantageous.
- Changes in India's patent laws, if pressured by the US, must be implemented on an MFN basis for all countries.
Focus Points
- Finalize areas for swift negotiation by May-end.
- Focus on achievable outcomes by fall 2025.
- Explore an interim trade deal by July 9.