India–US Interim Trade Deal Brings Big Relief

After months of negotiations amid rising diplomatic tensions, India and United States of America last week reached a consensus over the fractured trade deal as both Narendra Modi and Donald Trump decided to reconcile the ties with a mutual understanding after the latter has agreed to slash the punitive tariff measures imposed on our country in the last one year. 

Now, both countries have finalized a framework for an interim agreement on reciprocal and mutually beneficial trade as Donald Trump allowed to cap the tariffs at 18% from the existing 25% on Indian exports. This deal is expected to give a big boost for Indian exporters, especially MSMEs, farmers and fishermen. Also, it will create new avenues for women and youth as lakhs of jobs will be created. 

Some of the categories for which tariffs will now be zero include generic pharmaceuticals, gems and diamonds, aircraft parts etc. All these sectors will gain big because they will get exemption under section 232 and this will give a tangible export gains for sellers. Other sectors which will benefit from the heartwarming trade deal are textiles and apparel, leather and footwear, plastic and rubber products, organic chemicals, home decor, artisanal products etc. 

Another executive order signed by Trump is the removal of 25% tariff imposed on India goods for buying Russian oil as promised during the part of the recent negotiations between the two countries. The additional 25% US duty will be removed with immediate effect. This is the first step towards revive the long-standing trade deal between the US and India. 

As part of the agreement last week, India has reportedly assured the White House that it would stop buying Russian Federation oil and give preference to United States energy products and committed to a framework to expand defense cooperation over the coming decade.

Earlier, Indian exports were tariffed at 50% after the harsh measures announced by Trump in Summer last year. This was the highest charge on products from any Asian country which trades with USA. 

Union Commerce and Industry Minister Piyush Goyal hailed the newly announced India-US Interim Trade Framework, saying it would open access to a $30 trillion US market for Indian exporters. PM Narendra Modi also acknowledged the development and labelled it as a great news for both countries.