India considers lower tariffs on US products under trade deal
What's the story
As part of the proposed Bilateral Trade Agreement (BTA), India is considering lowering import duties on select US products.
According to The Economic Times, this consideration mainly includes goods that are not imported in large quantities from the US.
The sectors being discussed include automobiles and auto components, where American imports do not pose a major threat to domestic manufacturers.
Product identification
Commerce department identifies products for duty concessions
The commerce department has started talks with different ministries to identify products that can be included in duty concessions without harming the local industry.
A special focus is being given to the agriculture sector.
The government is also assessing the possible impact of reciprocal tariffs US administration proposed on its trading partners.
Trade imbalance
India-US trade tariff disparity and future goals
Currently, India exports auto components worth some $15 billion to the US duty-free, while imports of similar products into India are taxed between 5% and 15%.
This tariff disparity was highlighted during an inter-ministerial meeting on the India-US BTA.
Both countries have set a goal to more than double bilateral trade to $500 billion by 2030 and finalize the first phase of a multi-sector BTA by autumn 2025.
Duty cuts
India announces duty reductions on certain US exports
In the Union Budget on February 1, India announced tariff reductions on certain US exports.
These included a reduction in tariffs on bourbon whisky from 150% to 100%, and cuts on imports of fish hydrolysate for aquatic feed, scrap materials, satellite ground installations, ethernet switches, and motorcycles.
These measures are expected to benefit American exporters.
Sector focus
Potential tariff cuts on labor-intensive sectors
As part of the proposed trade deal with the US, India may look to reduce tariffs on labor-intensive sectors such as gems and jewelry, automobile parts, and textiles.
In return, the US would lower tariffs on its industrial goods exports to India.
The effective customs duty on Indian exports of gold and silver, key ingredients for gems and jewelry, currently stands at 6%.
Trade statistics
Bilateral merchandise trade between India and the US
Bilateral merchandise trade between India and the US was at $82.53 billion (April-November) of the current fiscal.
Both sides have promised to boost bilateral trade by increasing US exports of industrial goods to India and Indian exports of labor-intensive manufactured products to the US.
Crude, petroleum products, cut and polished diamonds, electric machinery, and aircraft parts are some key goods India buys from the US.