Trade Talks Continue: India Rejects Reports Of US Deal Hold-Off

New Delhi: The Indian government has denied reports that it is halting a trade deal with the US, calling such claims "incorrect and misleading". According to reports, the Commerce Ministry has reiterated that India and the United States remain engaged in discussions for a mutually beneficial trade agreement. 

The Centre's refutation of the “misleading” reports comes after multiple reports claimed that brakes were put on the progress of the India-US trade pact, even after the two countries announced a framework for an Interim Agreement on reciprocal, mutually beneficial trade last month, reaffirming the broader Bilateral Trade Agreement (BTA).

Sources claimed that the reports of a hold-off emerged after the US launched a fresh investigation, labelling allegations of unfair trade practices by several countries, including India. The probe, initiated under Section 301 of the US Trade Act, focuses on structural excess capacity and production in manufacturing sectors. The central government has maintained that talks are ongoing, and there is no pause in the ongoing bilateral engagement. The clarification of the Government of India comes amid rumours that India might delay signing a trade deal with the US due to the new US investigation.

"We have noted a media report regarding ongoing trade talks with the US. It is denied that there is any hold-off in bilateral engagement. It is reiterated that the two sides remain engaged for a mutually beneficial trade agreement," the Commerce Ministry said in a statement. The US had earlier agreed to cut tariffs on Indian imports from 50% to 18% as part of an interim trade deal. However, the recent US probe has introduced new uncertainty, with some sources suggesting India might adopt a "wait-and-watch" approach.

US Ambassador to India, Sergio Gor, has expressed confidence that India will honour its commitments. "So we fully expect the nations that we've made deals with to honour those deals," he said, adding that it's a "win-win situation" for both countries. 

Uncertainty After US Supreme Court Strikes Down Trump's Tariffs

A global uncertainty looms after the US Supreme Court decides to strike down Trump's global tariffs, calling it “unlawful”, further putting the India-US trade pact in a bit of limbo. The two countries had reached a framework for an interim agreement, which included reducing tariffs on Indian exports to the US from 50% to 18%. However, with the Supreme Court's ruling, there were reports that India was seeking clarity on whether the US would revert to the original 18% tariff rate or apply a different level. 

However, following the Supreme Court's ruling, Trump imposed a temporary 10% tariff on imports from all countries, including India, for 150 days. A day later, furious Donald Trump revised the tariffs to 15% globally, though the actual tariff implemented was 10%. Since then, Trump and senior officials have said the levy may eventually rise to 15%. Trump criticised the Supreme Court's decision, labelling it "terrible" and calling the justices "fools".

Govt's ‘Wait And Watch’ Stance

The US Supreme Court's order and fresh investigation by the US law enforcement agencies, to probe the levies by other countries, has created uncertainty for Indian exporters, who are now unsure about the tariff rates they will face in the US market. The central government has adopted a "wait and watch" approach, assessing the situation before making any moves. 

Notably, the investigation launched by the US targeting policies and industrial practices of 16 economies, including India, is seen as a pressure tactic to force countries into signing trade deals. It is likely that India could present its case to the Office of the United States Trade Representative (USTR) and may consider approaching the World Trade Organization (WTO) if needed. 

Though the Indian government has also denied reports of a hold-off in bilateral engagement, stating that discussions are ongoing for a mutually beneficial trade agreement.

Key Terms Of Interim Agreement

Under the proposed deal, India will reduce tariffs on US products like dried distillers' grains, red sorghum, tree nuts, fresh and processed fruit, soybean oil, wine, and spirits. The US will impose an 18% tariff on Indian goods, including textiles, leather, and footwear, but may remove tariffs on select items like generic pharmaceuticals, gems, and aircraft parts if the agreement is successful. 

Also, India plans to purchase $500 billion worth of US energy products, aircraft, and technology over the next five years. The US has already reduced reciprocal tariffs on Indian imports from 50% to 18%, removing a 25% punitive tariff imposed due to India's Russian oil purchases. The talks between India and the US are ongoing, with a meeting of chief negotiators rescheduled to evaluate the latest developments. Commerce Secretary Rajesh Agarwal expects the deal to be finalised soon, with most issues ironed out

Further details regarding the ongoing development of the India-US trade deal are awaited.