Let’s try to understand from numbers that America and India trade dealImage Credit source: J Studios/Moment/Getty Images
The Father of All Deals is being discussed more than the Mother of Deals. Why not? This deal is happening between the world’s largest market and the world’s largest economy. A blueprint of which has been prepared. On which a consensus has been reached between both the countries. The things that have emerged from this blueprint. The eyes of the whole world are on those things. Especially on those numbers which can shock the whole world. The trade deal between India and America is not an ordinary trade.
The framework prepared for this will increase the market reach between the two countries. Tariffs will be reduced. The foundation of a large and comprehensive bilateral trade agreement will be laid. The special thing is that both the countries will be seen presenting an example of a balanced trade in front of the whole world. There will be strength in the supply chain. Also, both the countries will be seen cooperating with each other in the rapidly changing tech environment. Let us try to understand, based on some numbers, what it means to make a mega-deal with the world’s ‘superpower’…
Benefits to India from this mega deal
- 18 percent tariff set by the US, which is lower than major competitors
- India’s exports worth $44 billion will get tariff free entry in America.
- Tariffs on key technology inputs, chips, semiconductors, aircraft and machinery will be reduced.
- Zero tariff on spices, tea, coffee, avocado, barley, canary seeds, bakery products, cocoa and its products, sesame, poppy seeds, fruit jams and pastes.
- No extra tariff on goods covered under Section 232, aircraft and machinery parts, generic drugs, pharma materials and primary auto parts.
Benefit to cloth and apparel sector
- 0% duty on silk; Market reach of 13 billion dollars.
- Lead from other countries: China (35 percent duty), Bangladesh (20 percent), Vietnam (20 percent), Indonesia (19 percent).
Gems and Jewelery
- Access to a $61 billion market
- 0% tariff on diamonds, platinum, coins etc. up to $29 billion market
- Tariff benefit: South Africa (30 percent), Thailand (19 percent), China (35 percent)
leather and shoes
- Access to a $42 billion market
- Increase from China (35 percent), Indonesia (19 percent), Cambodia (19 percent)
toys
- $18 billion market opportunity
- Competitive reach: China (35 percent), Indonesia (19 percent), Vietnam (20 percent)
machinery and parts
Reaching a market of $477 billion, India’s exports currently stand at $2.35 billion, leading over Malaysia (19 percent), Thailand (19 percent), Vietnam (20 percent).
home decoration
- The country will get trade opportunities worth 52 billion dollars.
- Market access with 0% tariff in a $13 billion market for products like seats, lamp parts, chandeliers etc.
- Lead over China (35 percent), Vietnam (20 percent), Malaysia (19 percent)
non-tariff measures
- India to address US concerns on medical devices, information and communication technology import licensing and food/agri products
- New Delhi will also review US/global standards and testing norms within six months in selected areas
safeguard clause
Both countries clarified that any change in the tariffs agreed by either side allows the other side to amend its commitments. Digital trade currencies will be part of BTA.
boost growth
Due to increase in India’s exports, the gross domestic product (GDP) of financial year 2027 may increase by 20-30 basis points. This means that the country’s growth rate is likely to exceed 8 percent.
What did India offer?
- Low or zero tariffs on all US industrial goods
- Duty cuts on select agricultural and food products including animal feed, nuts, fresh and processed fruits, soybean oil, wine and spirits
- Apple, almond, cotton allowed on quota
- Sensitive essential commodities are outside the scope of the interim agreement
- Zero duty on 800-1,600 cc bikes, duty cut on diesel cars above 2,500 cc and petrol cars above 3,000 cc