The Federation of Indian Export Organisations (FIEO) argues for a tariff exemption from the US to enhance bilateral trade, targeting an increase from USD 200 billion to USD 500 billion. While there are challenges, especially from former President Trump’s administration regarding tariffs, discussions for a Bilateral Trade Agreement are underway, aiming for completion by fall 2025. Key sectors for negotiation have been identified, with both countries presenting their demands.

The Federation of Indian Export Organisations (FIEO) asserts that India merits a tariff exemption from the United States, as it actively engages with America across various domains, including the pursuit of a Bilateral Trade Agreement. FIEO Director General Ajay Sahai advocates that achieving the Mission 500 objective—expanding bilateral trade from approximately USD 200 billion to USD 500 billion—requires enhanced measures to facilitate seamless trade, which an exemption would promote.

In addition, exporters agree that the proposed tariff exemption would eliminate uncertainties regarding tariffs and boost India’s exports to the US. This is particularly significant in light of existing high tariffs imposed on China. However, the Global Trade Research Initiative (GTRI) cautions that it is improbable India will receive an exemption from the tariffs established during the Trump administration, especially since former President Trump has characterized India as a “high-tariff” nation.

According to GTRI Founder Ajay Srivastava, any potential exemption would necessitate India to yield substantial concessions across various sectors beyond mere trade issues. Such demands may include permitting Starlink to operate, facilitating Tesla’s market entry, revising the civil nuclear liability law, and eliminating the equalization levy on American technology firms. Despite this, Srivastava encourages India to maintain its stance on critical strategic and national issues, indicating that external pressure, such as sanctions, is ultimately unsustainable.

Senior officials from both India and the US have recently commenced discussions regarding the planned bilateral trade agreement. Brendan Lynch, the Assistant US Trade Representative for South and Central Asia, has arrived in India for negotiations with Additional Secretary in the Department of Commerce Rajesh Agrawal. Both nations aim to finalize the first phase of the agreement by the fall of 2025.

The US has expressed interest in enhanced access to markets particularly concerning industrial products, automobiles, wines, petrochemicals, and specific agricultural items. Conversely, India is likely to negotiate for reduced tariffs in labor-intensive industries, such as textiles. President Trump’s earlier announcements regarding reciprocal tariffs target countries like India and highlight the high tariffs India imposes on US imports.

India’s primary exports to the US in 2024 included drug formulations worth USD 8.1 billion, telecom instruments at USD 6.5 billion, and precious stones valued at USD 5.3 billion, among others. Conversely, notable imports from the US encompassed crude oil worth USD 4.5 billion and electric machinery amounting to USD 1.4 billion.

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The dialogue surrounding tariff exemptions between India and the United States emphasizes India’s strategic role in fostering bilateral trade. As negotiations progress toward a potential agreement, the focus on alleviating tariff burdens and enhancing export capabilities will be pivotal. However, it is essential for India to maintain its strategic interests amidst external pressures, ensuring a balanced approach to trade relations.

Original Source: m.economictimes.com

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