Earlier this month, India and the US released a joint statement to announce that a framework for an interim trade agreement has been finalised. “The joint statement lays down the contours of the deal. Now, the contours of the deal have to be translated into a legal agreement, which will be signed between the two sides,” Agrawal said.
The two sides are engaged in finalising that legal agreement, and virtual talks are going on.
“Next week, chief negotiator Darpan Jain will be leading a delegation to the US to finalise the legal (pact) to work towards the legal agreement. That work will carry on next week in Washington and, if need be, thereafter in March and July,” Agrawal said.
There is an effort to close and sign the deal in March, he said “but I have not put a deadline on it because legal agreement finalisation also has certain intricacies, which both sides will have to resolve.”
While Washington has already eliminated the 25% punitive tariffs on India for buying Russian crude, it is yet to issue an executive order to implement the reduction in reciprocal tariffs on Indian goods to 18% from 25%. “I am told they are processing it. It should be done fast. Our expectation is that it should be done this week, but in case it is not done, the team is there next week, and we can pursue and see why it is taking time,” Agrawal said. He explained that the agreement is that 18%will be done in the interim pact, and the remaining tariff lines, wherever reciprocal tariffs are expected to go down to zero, that would be done after the legal agreement is signed.
“And from our side also, any reduction in tariff, any market access, preferential market access will be extended only after the legal agreement is signed,” he said.
On India getting concessional duty access for garments made using American yarn and cotton under its bilateral trade agreement with the US, like the benefit currently extended to Bangladesh under a US trade deal, the secretary said that India imports around $200-250 million of US cotton on average. “And the variety being imported, I presume, is the same variety which we get the preferential market access,” he added.
An official said that India is a net importer of cotton and it needs more of it as it eyes higher exports of textiles to the EU and US.
Agri, digital trade
Trade agreements with the US and the EU have opened up an opportunity of $400 billion for India’s agriculture sector, an official said.
At present, India’s agricultural exports to the US are 2.8 billion, while imports are $1.5 billion. Overall, India’s imports of agri goods are worth $35 billion, while exports are valued at $51-52 billion, and the figures are increasing.
On the US including references to agriculture and digital trade in their fact sheet, which are not there in the joint statement, the official said: “Pulses weren’t there in the joint statement. So, in the factsheet it was innocuous.” Officials said that the two sides haven’t discussed digital taxes, ecommerce moratorium or equalisation levy in the negotiations in the first tranche of the trade deal.
“On barriers to digital trade, it is for both sides to identify in the BTA. Digital taxes we haven’t even discussed,” said an official.
India’s non-marine agricultural exports to the US are worth $2.8 billion and imports $1.5 billion.
On India buying DDGS (Dried Distillers Grain with Solubles) from the US, the official said: “We haven’t agreed to any GM. Anything coming into the country has to go through bio security. There are TRQ (Tariff Rate Quota) wherever we’ve opened up in agriculture”, adding that the EU and the US are $400 bn agriculture economies.
