India-US resume trade talks to finalize bilateral agreement

Chief negotiators from India and the United States are set to resume trade talks on Tuesday to finalise what Commerce Minister Piyush Goyal said, the "commas and full stops" of a bilateral trade agreement (BTA).

The American team led by chief negotiator Brendan Lynch will hold three-day talks with India's chief negotiator Darpan Jain, Additional Secretary in the Department of Commerce, to advance the trade deal the two nations agreed in February.

The two countries reached an agreement on a trade pact earlier this year before the US Supreme Court struck down US President Donald Trump’s sweeping reciprocal tariffs. Soon after the ruling, the office of the US Trade Representative launched investigations under Section 301 of the Trade Act into several countries including India over concerns of forced labor and excess production capacity. If found guilty, they would apply additional penalty tariffs.

India and the US are expected to finalise the details of the interim agreement and advance negotiations on the broader Bilateral Trade Agreement (BTA) covering market access, non-tariff measures, customs and trade facilitation, investment promotion, and economic security alignment.

Earlier on Monday the US Embassy in New Delhi affirmed that the two sides are seeking a trade agreement “that will be enduring, beneficial, and sustainable for both countries.”

Also read: India-US trade deal advances as talks focus on Section 301 probes and 'minor issues'

What does India demand?

India will seek relief from any tariffs stemming from US trade investigations when negotiators from the two nations meet this week to finalize an interim deal, an official familiar with the matter told ET, adding thatthe deal could be agreed if India gets a fair, equitable and balanced pact.

New Delhi has denied the allegations under Section 301, asking Washington to terminate the investigations and address the issue within the framework of ongoing trade negotiations and not through unilateral measures.

"Mostly, everything is finalised," said Goyal. "As you know, US Ambassador Gor said that 99% of the things have been finalised. Discussions are going on about small issues, commas and full stops."

The agreement is under process to meet demands of some recent legal changes in the US, Goyal said.

"While finalising, how will the legal changes that have taken place in the US be reflected in the final agreement, and what kind of changes will be made accordingly," he said. "After finalising that, I am fully confident that, with the US, we will conclude the first tranche of the BTA as soon as possible, sign it, and start further discussions on how to have a more comprehensive BTA."

Goyal further added saying, "Would prefer a deal with US that offers competitive advantage over peer economies."

The US Supreme Court ruled on February 20 against Trump's reciprocal tariffs imposed under the International Emergency Economic Powers Act (IEEPA). Following that, the US President announced an additional 10 per cent tariff on all countries for 150 days starting February 24. In light of these changes, he two nations postponed a round of bilateral talks that had been scheduled for February. The two sides subsequently met in Washington this April.

Under the agreed trade framework, India proposed to eliminate or reduce tariffs on all US industrial goods and a wide range of food and agricultural products, and expressed intentions to purchase $500 billion worth of US energy products, aircraft, precious metals, and technology over the next five years.

A quick rewind

Under the agreed interim trade agreement between India and the US, Washington slashed reciprocal tariffs on India from 25% to 18%. Trump also agreed to remove the additional 25% tariff on imports from New Delhi in recognition of the country's commitment to stop purchasing Russian crude oil.

The key terms of the trade deal included the following:

India will eliminate or reduce tariffs on all US industrial goods and a wide range of food and agricultural products, including dried distillers’ grains (DDGs), red sorghum, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, and additional products.

India intends to buy more products and purchase over $500 billion of US energy, information and communication technology, coal, and other products.

India committed to address non-tariff barriers that affect bilateral trade in priority areas.

India committed to negotiate a robust set of bilateral digital trade rules that address discriminatory or burdensome practices and other barriers to digital trade.

The two nations committed to strengthen economic security alignment to enhance supply chain resilience and innovation through complementary actions to address non-market policies of third parties as well as cooperating on inbound and outbound investment reviews and export controls.

New Delhi and Washington are also set to "significantly increase bilateral trade" in technology products and expand joint technology cooperation.