NEW DELHI: Govt on Monday said it will draw up the broad contours of the proposed bilateral trade agreement with the US over the next few weeks, even as it keeps tabs on how the Trump administration’s move to impose reciprocal tariffs unfolds.
“Give us a couple of weeks to decide what is the level of ambition in the first tranche (of the agreement that is proposed to be finalised by Fall) that we are looking at and what is the nature of the agreement that we will be arriving at. The two sides will need to sit together and try to finalise the broad contours,” said Rajesh Agrawal, additional secretary in the commerce department.
Last week, PM Narendra Modi and US president Donald Trump set a target of more than doubling bilateral trade to $500 billion by 2030, while agreeing to negotiate a bilateral trade agreement. “We have agreed to a roadmap for a fair and mutually beneficial bilateral agreement… It is not akin to a free trade agreement,” another official said.
As part of FTAs, countries typically announce a reduction or elimination of import duty on 90%-95% of goods, if not more, in addition to offering concessions for services and investment. The initial agreement may be limited to import duty on goods, which has been Trump’s main focus as he is seeking to reduce trade deficit with countries and get companies to invest in the US to create jobs.
While a mini trade deal was on the table during Trump’s first term, the move did not go through. Officials have indicated that India is open to importing more oil, gas and defence goods from the US, while seeking to push its labour-intensive products, such as textiles and leather. Besides, farm products will be part of the trade agreement.
Officials said the negotiations can formally commence once Howard Lutnick is confirmed as commerce secretary.
The announcement of a trade agreement came hours after Trump announced reciprocal tariffs, a move aimed at raising import duty on products from a country where American goods are subject to higher levies.
Officials said a bill to provide legal backing was introduced in the US Congress and is currently being examined by a select committee. “We will see when it comes,” an official said when asked if the Indian govt was planning any action at the WTO since the proposed move violates global trade rules.