India-US BTA: Commerce ministry to begin talks with other departments

Interministerial talks to explore tariff cuts and market access; key sectors under focus include EVs, oil derivatives, plastics, and sensitive farm goods like dairy and almonds

As India and the United States (US) ‘broadly’ develop an understanding on the contours of a proposed trade deal, the commerce department is set to soon start talks with the ministries of agriculture, heavy industries and petroleum, among others, amid pressure to import from the US.

 

These inter-ministerial discussions are crucial prior to starting negotiations for a bilateral trade agreement (BTA).

 

Sectoral expert level engagements under the BTA will start virtually in the coming weeks, which will pave the way for an early negotiating round in person, the commerce department said on Saturday.

 

Both countries hope to finalise the first tranche of the trade deal by the fall of 2025.

 

“During the talks between the US Trade Representative (USTR) team and the commerce department (over the last few days), there has been a large agreement on the sectors that could be part of the deal (for tariff tweaks and greater market access). There were also talks on sectors that need to be kept out of the deal as it may cause damage politically (in India),” a person aware of the matter told Business Standard.

 

While both sides made progress, they could not finalise the contours of the BTA, given a tight timeline of four days and sensitivities on both sides. That apart, the broad contours of the deal may need a final political approval from both sides.

 

This comes against the backdrop of Assistant USTR for South and Central Asia Brendan Lynch, along with a team of US government officials visiting India during March 25-29. They held meetings with the Indian side as part of the ongoing bilateral trade discussions. Lynch is also the chief negotiator for the BTA.

 

“Now, the discussions with the line ministries will begin and the greater challenge will be the tariff cuts and market access that India is willing to offer. This will have a direct impact on the extent to which the US will be ready for tariff concessions,” another person said. As far as goods are concerned, some areas that have been the US’s key demand include lower tariffs on crude oil derivatives, plastics, polymers, electric vehicles and agricultural products, including dairy. On this, India also needs to have further discussions with the line ministries. “Probably, the bigger challenge (for India) will be duty concessions on electric vehicles, agricultural products such as apples, fruit juice, almonds, and soybeans. Besides, dairy has always been a red line. As a result, India needs to have more discussions with the industry associations,” the person said.

 

During the first phase of the deal, the idea is to broadly keep liberalisation of goods and digital services as the main focus, although all bilateral issues were discussed during the four-day talks between India and the US.

 

There will be greater clarity on the matter over the next few weeks.

 

“During these discussions the two sides also had a productive exchange of views on deepening bilateral cooperation in priority areas, including increasing market access, reducing tariff and non-tariff barriers and deepening supply chain integration in a mutually beneficial manner,” stated the official statement released by the commerce department on Saturday.

 

The department also said that the ‘successful conclusion’ of the discussions reflects progress in efforts to expand India-US bilateral trade and investment relations.