Business: The much-awaited trade agreement between India and America may be sealed soon. According to sources related to the matter, this agreement can provide great relief to Indian exporters. Under the agreement, the heavy 50 percent tariff currently imposed on Indian products can be reduced to 15-16 percent.
According to media reports, energy and agriculture are the major focal points in the talks. Sources have indicated that under this deal, India may agree to gradually reduce the import of Russian crude oil. The US had imposed a punitive duty of 25 per cent on Indian exports due to the purchase of Russian oil, which was in addition to the 25 per cent tariff. Oil imports from Russia currently constitute about 34 percent of India’s total crude oil imports. India imports about 10 percent (by value) of its current oil and gas needs from the US.
The trade agreement is being negotiated by officials of the Commerce Ministry, External Affairs Ministry and National Security Advisor. Sources said that the broad outline of the agreement is ready, but in sensitive areas like agriculture and energy, high-level political approval is needed before announcement.
Market will open for American agricultural products
According to sources, under the agreement India can increase its market access to non-genetically modified (non-GM) US maize and soymeal. After China drastically cut US corn imports, the US is looking for new buyers. Similarly, given the growing domestic demand from poultry, dairy and ethanol industries, India is considering increasing the quota for non-GM maize imports from the US, although the 15 per cent duty on it will remain unchanged. Talks are also underway on allowing import of non-GM soymeal. A consensus has not yet been reached on tariff cuts on dairy products, including high-end cheeses, a key demand of the US team.
Announcement possible in ASEAN conference
According to sources, the finalization of this bilateral trade agreement is likely to be announced at the ASEAN Summit to be held later this month. However, there is little hope of PM Modi attending the conference. Foreign Minister S Jaishankar can participate in the conference being held in Kuala Lumpur from 26 to 28 October.
Preparation for change in energy policy
The Indian side of the agreement seems ready to reduce Russian oil imports. Instead of any formal announcement, this change will be done by advising government oil companies to divert crude oil imports to other places including America. Sources said, India has also informed Moscow about this cut.
Bilateral trade continues to boom
According to the data, India imported crude oil worth $137 billion in the last financial year. In the first half of the current financial year, India-US trade stood at $71.41 billion, which is 11.8 percent more than the same period of the last financial year. During this period, India’s exports to America increased by 13.4 percent to $45.82 billion.
