WASHINGTON: The United States and India moved closer to a trade pact, releasing an interim framework that would lower tariffs, reshape energy ties and deepen economic cooperation as both countries seek to realign global supply chains.
The framework reaffirms a commitment to negotiations toward a broader bilateral trade agreement, the two governments said in a joint statement, while noting that further negotiations were needed to complete the pact.
US President Donald Trump announced a deal with India last Monday to cut US tariffs on Indian goods to 18% from 50% in exchange for India halting purchases of Russian oil and lowering trade barriers.
Half of the 50% rate had been imposed separately by Trump as punishment for India’s purchases of Russian oil, which he said were fuelling Moscow’s war effort in Ukraine.
Trump signed an executive order last Friday rescinding that 25% portion after India agreed last week to shift its oil buying to the United States and Venezuela.
Last Friday’s joint statement provides additional details compared with initial outlines of the trade deal revealed by Trump last Monday.
It confirms that India will purchase US$500bil in US goods over a five-year period, including oil, gas, coking coal, aircraft and aircraft parts, precious metals, and technology products. The last category includes graphics processing units, typically used for artificial intelligence applications, and other goods used in data centres.
It said India would eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products, including dried distillers’ grains and red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits.
But the deal will apply an 18% tariff rate on most imports to the United States from India, including textiles and apparel, leather and footwear, plastic and rubber, organic chemicals, home decor, artisanal products and certain machinery.
India will get the same tariff relief granted to other allied countries that have signed trade deals with the United States on certain aircraft and aircraft parts, and will receive a quota for auto parts imports that will be subject to a lower tariff rate, according to the statement.
Depending on the results of the Trump administration’s tariff investigation into pharmaceuticals and their ingredients, “India will receive negotiated outcomes with respect to generic pharmaceuticals and ingredients,” the statement said.
Indian Trade Minister Piyush Goyal said last Thursday that Washington and New Delhi aimed to sign a formal trade agreement in March, after which India’s tariff cuts on US exports would go into effect. — Reuters
