Prime Minister Narendra Modi and US President Donald Trump announced that they had reached a trade agreement that would lower the tariffs set for India…reports Asian Lite News
A South Asia expert at the Asia Society suggests that India’s recent free trade agreement (FTA) with the European Union might have prompted the US to pursue a trade deal with India.
“Though India-US trade negotiations were on for a while, the deal with EU could have served as an impetus for the US to push forward”, Farwa Aamer, the director of South Asia Initiatives at the Asia Society Policy Institute (ASPI), said on Monday.
“The timing is interesting as the deal comes straight after the EU-FTA”, she said.
Prime Minister Narendra Modi and US President Donald Trump announced that they had reached a trade agreement that would lower the tariffs set for India’s exports to 18 per cent from the 25 per cent set last year by Washington.
According to the White House, the US will also drop the punitive 25 per cent tariff that Trump had imposed on India for buying Russian oil.
The breakthrough came after about a year of negotiations between the two countries, which were sometimes rocky.
“For India, the Russia question remains”, Aamer said. “Even though it has and will change its oil import structure away from Russia, India would still want to keep relations steady”.
The agreement was announced after a phone conversation between PM Modi and President Trump.
“It was finally the leadership-level engagement that we have been talking about since the beginning that was able to bring the deal around”, Aamer said.
Another expert with high-level trade experience, Wendy Cutler, stated that the deal between India and the US would give India an advantage over its Southeast Asian competitors.
“Importantly, the US reciprocal tariff for India will be reduced to 18 per cent, giving Indian exporters a slight edge in the US market over its ASEAN competitors who have secured 19-20 per cent tariffs”, she said.
A former acting Deputy US Trade Representative, Cutler, who is the senior vice president of ASPI, said that it was likely the US got a better deal than the EU.
On India’s cuts to tariff and non-tariff measures impacting trade, “Trump’s language gets vaguer, only conveying that India ‘will move’ to zero percent” she said.
“However, based on the language of the Truth Social post (by Trump announcing the deal), it does seem likely that the US secured deeper and broader tariff cuts than the EU achieved in its recently announced FTA with Delhi”, she said.
While tariffs on EU exports of some categories like electronics and machinery would be eliminated over time, some like alcohol beverages will go down to 20 per cent.
Trump said on Truth Social that India will “move forward to reduce their Tariffs and Non-Tariff Barriers against the United States, to ZERO”.
Overall, Cutler said the India-US agreement “will help clear the pathway for the US and India to work cooperatively on other pressing matters concerning critical minerals, technology cooperation, and supply chain resiliency”.
External Affairs Minister S Jaishankar arrived here on Monday en route to Washington for the Critical Minerals Ministerial convened by US Secretary of State Marco Rubio.
