Earlier this month, India and the United States issued a joint statement announcing that the framework for an interim trade agreement had been finalized. “The joint declaration defines the format of the agreement. Now, the format of the deal has to be translated into a legal agreement, which will be signed between the two parties,” Agarwal said.
Both sides are busy finalizing the legal agreement, and virtual negotiations are ongoing.
“Next week, chief negotiator Darpan Jain will lead a delegation to finalize the legal (agreement) to work towards a legal agreement. This work will begin next week in Washington and, if necessary, later in March and July,” Agarwal said.
Efforts are underway to close and sign the agreement in March, he said.
While Washington has already scrapped a 25% punitive tariff on India for buying Russian crude, it has yet to issue an executive order to reduce the reciprocal tariff on Indian goods from 25% to 18%. “I’m told they’re processing it. It should be done quickly. Our expectation is to have it done within the week, but if that doesn’t work, the team is there next week, and we can follow up and see why it’s taking time,” Agarwal said. He explained that according to the agreement, 18 percent will be done in a temporary agreement and the rest of the tariffs will be done after the signing of the legal agreement in the event that the mutual tariff is reduced to zero.
“And from our side, any tariff reduction, any market access, market preference will be extended only after the signing of the legal agreement,” he said.
Regarding India getting preferential tariff access for garments using American yarn and cotton under the bilateral trade agreement with the US, as is currently granted to Bangladesh under the US trade agreement, the secretary said that on an average, India imports US$200-250 million worth of cotton. “And the type that is imported, I think, is the type that we prefer to market,” he added.
An official said that India is a net importer of cotton and needs more of it as textile exports to the European Union and the United States are high.
Agriculture, Digital Commerce
Trade agreements with the US and EU have opened up a $400 billion opportunity for India’s agriculture sector, an official said.
Currently, India’s agricultural exports to the US are $2.8 billion, while imports are $1.5 billion. Overall, India’s agricultural imports are worth $35 billion, while exports are worth $51-52 billion, and the figures are rising.
Its fact sheet on the US includes references to agriculture and digital commerce, which are not in the joint statement, the official said: “Dal was not in the joint statement, so in the fact sheet it was innocuous.” Officials said the two sides did not discuss digital taxes, e-commerce bans or equivalent tariffs in the first phase of the trade deal talks.
“Regarding barriers to digital trade, that is for both sides to identify in the BTA. We have not even discussed digital taxation,” an official said.
India’s non-maritime agricultural exports to the US are valued at $2.8 billion and imports at $1.5 billion.
On India’s purchase of DDGS (Dried Distillers Grain with Solubles) from the US, the official said: “We have not agreed to any GM. Everything that comes into the country has to go through biosecurity. There is a TRQ (Tariff Rate Quota) where we are open in agriculture”, adding that the EU and US $400 is economical.
