Parl panel seeks early India-US trade deal with protection from US tariffs

The Parliamentary panel urged an early India-US trade pact while seeking exemptions from future US tariff hikes and stronger safeguards for Indian exporters

The Parliamentary Standing Committee on Commerce has urged the government to conclude the proposed India-United States Bilateral Trade Agreement (BTA) at the earliest while ensuring that India's interests are adequately protected.

 

"The proposed Bilateral Trade Agreement, without compromising Indian exporters' interests, should be concluded at the earliest so that businesses in both countries can benefit from a stable and predictable trade environment," the panel said in its report tabled in Parliament.

 

The committee recommended that India negotiate "complete exemption" for key export products, including generic medicines, critical minerals and smartphones, from any future US tariff increases. It also proposed that the Directorate General of Foreign Trade (DGFT) establish a special, fast-acting watch desk to track US customs audits in real time so that Indian exporters can receive immediate warnings about any new import rules.

 

 

To address non-tariff barriers, the panel asked the government to fast-track Mutual Recognition Agreements (MRAs) for professional services, pharmaceuticals and agricultural standards to prevent arbitrary technical barriers to trade (TBT) at US ports.

 

To prevent trade disputes from escalating, the committee proposed establishing a dedicated, fast-track bilateral institutional mechanism with US trade authorities to proactively flag, discuss and resolve trade frictions and compliance disputes before they escalate into restrictive tariff actions.

 

The committee also recommended setting up an institutional mechanism to routinely review currency volatility and logistics challenges to cushion MSME-led export sectors from sudden regulatory changes. It said such measures would help build a "stronger, more balanced and mutually beneficial economic partnership" between India and the US.

 

Noting the growing importance of services trade, the report said India's services exports to the US stood at $51.2 billion, growing at a compound annual growth rate (CAGR) of 11.58 per cent since 2020, while imports reached $47.32 billion, with a CAGR of 18.68 per cent. Bilateral services trade has more than doubled from $40.53 billion in 2014 to $98.52 billion in 2024. The committee, however, noted that India's services imports from the US are growing at a much faster rate (18.68 per cent CAGR) than its services exports (11.58 per cent CAGR).

 

The panel recommended that the government actively leverage global friend-shoring trends to deeply integrate Indian manufacturers into critical US supply chains, particularly in electronics, semiconductors and clean energy. Alongside this, it called for "targeted investment promotion strategies" to attract US foreign direct investment into India's manufacturing sector.

 

The committee called for special attention to MSMEs to enable their effective participation in exports and enhance their resilience to US tariff measures. It also recommended a "specialised market-linked incentive scheme" to help textile and gems-and-jewellery exporters diversify product designs in line with changing consumer preferences in the US.

 

The panel also recommended that the BTA negotiations focus on reducing tariffs on engineering goods, auto components and other automotive products. It said the removal of additional US tariffs would improve India's competitiveness and provide exporters with the necessary predictability to formulate long-term business strategies.

 

The committee further urged the government to resolve tariff-related issues involving steel, aluminium, copper and chemical products under the BTA. It asked the department to engage with the US to safeguard the domestic industry in relation to Section 232 tariffs and Section 301 investigations and to secure "long-term, barrier-free access" to US aluminium and copper scrap to avoid disruptions in raw material supplies for downstream industries.

 

The report noted that exporters continue to face uncertainty due to volatile exchange rates, commodity prices and higher US tariffs. It observed that the US tariff on Indian goods, though reduced from the peak imposed a few months ago, still stands at 18 per cent compared with the earlier rate of 3 per cent, holding that the elevated tariff regime continues to affect India's exports and the broader economy.

 

The Ministry of Commerce and Industry on Thursday said claims in the media suggesting that India intends to import large quantities of ethanol from the United States for fuel blending are "baseless and factually incorrect".

 

"As per the domestic policy framework, ethanol used for fuel blending under the Ethanol Blended with Petrol Programme is sourced entirely from domestic producers. There is no import of ethanol for fuel blending from the US. Further, no concessions or commitments relating to the import of ethanol for fuel blending from the US have been made in the India-US trade discussions," the department said, adding that India's fuel blending programme and ethanol procurement continue to be governed solely by India's domestic policy requirements.