NEW DELHI: India and the US are close to working out the final contours of the “early tranche” of the proposed bilateral trade agreement and are now starting work on the possible text for the deal, which is likely to be finalised before July 9, when American president Donald Trump plans to remove the freeze on reciprocal tariffs.Govt is likely to offer concessions for some of the farm products that are of interest to the US, along with concessions on automobiles, in return for getting a 10 per cent duty – Trump’s baseline tariff – for labour-intensive products, such as textiles, footwear and, possibly, certain auto parts. With the current US administration lacking Congressional mandate to finalise trade deals, a zero-duty regime will have to wait until things settle down in the US.
With a 10 per cent levy on products where India has a comparative advantage, the government is hoping to make Indian exports more competitive, especially if the reciprocal tariffs kick in. In any case, India, with 26 per cent reciprocal tariffs, including the 10 per cent baseline duty, was seen to enjoy a competitive advantage over several countries with which its exports compete.Besides, with sanitary and phytosanitary standards and technical barriers to trade also discussed during the last round of negotiations with American officials between June 4 and 10, the government is hoping that some of the issues faced by exporters shipping goods to the US will also be addressed. Digital trade, customs and trade facilitation and the legal framework were part of the discussions in the Capital earlier this month.Government sources indicated that India is keen for a text to be ready in some form before the deal is made public. This is seen to be crucial as the current US administration has been making announcements without the draft text in place and then claiming victory. Even the Chinese authorities have had to contend with the claims made by Trump on social media after the last dialogue. The announcement with the UK was seen to be more structured.By all accounts, several issues, including the court ruling on reciprocal tariffs for which Trump had invoked emergency provisions, will, however, play a part in finalising the early tranche for which a Fall (Sept/ Oct) date had been fixed. Besides, India is keen that an arrangement be worked out where it retains an advantage over its peers in case the tariffs are declared illegal by American courts.
