India and US Negotiate Key Trade Agreement
New Delhi: As India and the United States embark on negotiations for a significant bilateral trade agreement, domestic industries are expressing a willingness to accept tariff reductions on select products. This comes in response to U.S. President Donald Trump’s ongoing threats regarding tariffs. Indian Commerce and Industry Minister Piyush Goyal is currently in the U.S. to meet with key officials, aiming to finalize the deal by the fall deadline set by Prime Minister Narendra Modi and Trump.
Tariff Negotiations Underway
The discussions between India and the U.S. are crucial, especially as Trump has repeatedly highlighted India’s high tariffs. Indian industries recognize the need for a reciprocal approach in these negotiations. The Indian government is strategizing to lower tariffs in certain sectors while seeking concessions in areas that are vital to its economy, such as textiles and leather.
During these negotiations, the apparel sector has identified over 50 items of interest, advocating for reduced tariffs, including those covered by the Production-Linked Incentive (PLI) scheme. Mithileshwar Thakur, Secretary General of the Apparel Export Promotion Council (AEPC), stated that the government could consider lowering customs duties on major apparel products imported from the U.S. He suggested a “zero-for-zero” approach, which would eliminate tariffs in exchange for similar actions from the U.S.
Engineering and Gems Sectors Seek Concessions
The engineering goods sector, which represents a significant portion of India’s exports, has pinpointed 33 items where Indian exporters generate over $1 million in sales. This includes stainless steel angle bars and round bars, where the sector is seeking tariff concessions. Pankaj Chadha, Chairman of the Engineering Export Promotion Council (EEPC) India, noted that while the U.S. has imposed a 25% tariff on steel products, India’s duties range from 7.5% to 15%. He emphasized that the impact of reciprocal tariffs would be minimal, as most imports are scrap, which is duty-free.
In the gems and jewelry sector, proposals include reducing import duties on polished and lab-grown diamonds from 5% to 2.5%, and lowering tariffs on gold, silver, and platinum jewelry from 20% to 17%. Kirit Bhansali, Chairman of the Gems & Jewelry Export Promotion Council, warned that failing to adjust tariffs could jeopardize India’s market share in the U.S., where it holds significant positions in cut and polished diamonds and gold jewelry.
Challenges in Agriculture and Automotive Sectors
While the apparel and engineering sectors are actively pursuing tariff reductions, the automotive components sector may face challenges due to India’s protective measures. The Indian government could negotiate lower duties on automobiles, especially with pressure from Trump and influential figures like Elon Musk of Tesla. However, the agricultural sector presents a more complex scenario. Issues surrounding poultry and dairy products, including chicken legs and shrimp, remain contentious. The negotiations in this area will require careful consideration to balance domestic interests with international trade obligations.
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