India-US bilateral trade deal: In-person talks may begin by May-end

India and the United States (US) are trying to finalise a trade deal as ‘quickly as possible’, with both sides gearing up for starting negotiations by the second half of May, a senior commerce department official said on Tuesday.

 

Virtual discussions on sectoral issues will start this week.

 

The terms of reference (ToR) of the India-US proposed bilateral trade agreement (BTA) was finalised and signed last month, during the visit of the US Trade Representative (USTR) team to New Delhi.

 

India is also looking at non-tariff barriers as well as tariff barriers in the agreement. If these barriers are reduced by both sides, it will lead to higher growth in trade for both countries.

 

Both sides hope to conclude the first phase of the pact by the fall (September-October) of this year, with an aim to more than double the bilateral trade to $500 billion by 2030.

 

They are also exploring a carve out for an interim trade deal within the next 90 days, provided the ongoing talks progress well and the outcome is a ‘win-win’ for both nations.

 

The US has paused the country-specific reciprocal tariffs for 90 days, excluding China. This will allow countries to strike bilateral trade deals with Washington.

 

Commerce Secretary Sunil Barthwal said India has decided to follow the trade liberalisation path with the US. The BTA, if finalised, will open huge opportunities for both Indian and American businesses.

 

“...There are both concerns as well as opportunities for India in terms of the current tariffs (globally). India has already taken a path, where we will be going for trade liberalisation with the US,” Barthwal told reporters during a briefing.

 

Dumping concerns

 

With the US imposing sectoral and additional tariffs, the government has set up an inter-ministerial import surge monitoring group as high tariffs on certain countries, such as China and Vietnam, may lead to diversion of goods to India.

 

China imposing retaliatory tariffs on American goods can further increase the flow of US agricultural products to India.

 

“With the global uncertainties related to tariffs, obviously there are elevated apprehensions related to likely flooding or surge in imports. To look at that, an import surge monitoring group has been set up,” additional secretary in the department of commerce L Satya Srinivas said.

 

Srinivas added that the group is monitoring weekly as well as monthly trends by commodities and by countries. If any unusual surge is reported, the commerce ministry can take action such as imposing anti-dumping, safeguard duties or levying minimum import price.

 

There’s a risk of merchandise dumping into India due to reciprocal tariffs amid global trade tensions. And, rising US costs may prompt exporters from countries like China, Vietnam and Indonesia — all with US trade deficits — to divert goods to India, potentially triggering import surges, the commerce department said.

 

Director General of Foreign Trade (DGFT) Santosh Kumar Sarangi said a help desk has been operationalised since April 11 for both exporters and importers to address their issues. “We have done stakeholder and inter-ministerial consultations for that,” added Sarangi.

 

India-EU to focus on finalising 1st tranche of deal

 

India and the European Union (EU) will follow a ‘pragmatic’ approach and attempt to finalise an ‘early harvest’ or first tranche of the long-pending trade deal, which may be easier to conclude, a senior commerce department official said on Monday.

 

The early harvest deal will focus on core trade issues such as rules of origin, tariff, and customs facilitation.

 

Typically, full-fledged, comprehensive free trade agreements (FTA) may take longer to conclude. The change in approach comes amid India and the EU’s decision to sign a trade deal by the end of 2025.