India-U.S. Bilateral Trade Agreement Highlights
Overview of Trade Potential
India plans to source imports worth about $300 billion from the U.S., potentially increasing its purchase from the current $40-50 billion annually to $500 billion over the next five years.
- The goal is to support India’s ambition to grow into a $30 trillion economy.
- The target includes various sectors like aviation, energy, and technology.
Sector-Specific Imports
- Aviation Sector: India needs at least $100 billion worth of imports, including aircraft, parts, and engines.
- Energy Sector: Plans to import $500 billion worth of U.S. energy products, including oil, LNG, LPG, and coking coal.
- Technology and Manufacturing: High demand for semiconductor chips, high-end machinery, data center equipment, and ICT products.
- Data Centers: Expected growth with big tech investments, requiring U.S. equipment.
Competitive Advantage and Tariffs
- India's tariffs at 18% provide a competitive edge over countries like China (35%) and others in Asia and Latin America, which face higher tariffs.
- Lower tariffs benefit India’s labor-intensive sectors, such as textiles, leather, handicrafts, and gems.
Safeguards and Reciprocity
Adequate provisions are in place to safeguard Indian farmers and domestic industries from any sudden increase in imports from the U.S.
- India exports $50-55 billion worth of agricultural and fish products, which will benefit from the trade deal.
- No duty concessions granted for sensitive products like dairy, GM products, meat, poultry, soya meal, and corn.
Economic and Trade Growth
- India's imports are expected to grow to $2 trillion in the next five years, with a significant portion sourced from the U.S.
- Existing orders include $50 billion worth of Boeing aircraft, with projections for more orders from companies like Tata.
- Growth in steel industry demands $30 billion per year for coking coal imports.
Conclusion and Ongoing Negotiations
The trade agreement between India and the U.S. is a work in progress, with ongoing negotiations to finalize terms and address mutual concerns. The agreement is expected to bolster both economies by enhancing trade relations and enabling large-scale imports and exports.
