india us trade deal
India-US Trade Deal: India has achieved such a victory in the Kurukshetra of global trade, the echo of which is being heard from Vietnam to Beijing. According to the latest report of SBI Research, India has secured its place among the economies with lowest tariff (import duty) among Asian countries. After the new agreement with America, India’s tariff rate has come down to just 18%. This agreement has made India more competitive than countries like Vietnam, which till now was considered America’s favorite trading partner.
How India defeated China
In the world of business, a one percent fluctuation changes the game worth millions of dollars. The figures revealed in the SBI report are shocking. While after negotiations the tariff on India has been reduced to 18%, the rate for China is still at a whopping 37%. This simply means that Indian goods will now be much cheaper and more attractive than Chinese goods in the American market.
Not only this, India has also left behind major exporting countries like Vietnam (20%), Thailand (19%) and Taiwan (20%) in this matter. Only South Korea and Japan (15%) are now in a slightly better position than India. This change is no less than a lifesaver for the Indian textile, leather and footwear industry, because now their products will be able to survive more strongly in the American market compared to other Asian countries.
Trade of major countries with America
| Country | Tariff post negotiation | Recipient country’s share in total US exports (as of CY25 Nov) | Partner country share in total US imports (as of CY25 Nov) | US trade balance with the country ($bn as of CY25 Nov) |
| bangladesh | 19 | 0.1 | 0.3 | -7 |
| cambodia | 19 | 0.0 | 0.4 | -14 |
| China | 37 | 4.9 | 9.2 | -189 |
| India | 18 | 2.1 | 3.0 | -53 |
| Indonesia | 19 | 0.5 | 1.0 | -22 |
| Japan | 15 | 3.8 | 4.3 | -58 |
| malaysia | 19 | 1.3 | 1.7 | -28 |
| philippines | 19 | 0.4 | 0.5 | -8 |
| south korea | 15 | 3.1 | 3.6 | -50 |
| taiwan | 20 | 2.5 | 5.6 | -127 |
| Thailand | 19 | 0.9 | 2.6 | -64 |
| vietnam | 20 | 0.7 | 5.6 | -161 |
| laos | 40 | 0.0 | 0.1 | -2 |
| Brazil | 50 | 2.5 | 1.2 | 13 |
| Canada | 50 | 15.2 | 11.2 | -47 |
| myanmar | 40 | 0.0 | 0.0 | -1 |
| South Africa | 30 | 0.3 | 0.5 | -10 |
| Pakistan | 19 | 0.1 | 0.2 | -2 |
| UK | 10 | 4.4 | 1.9 | 29 |
| European Union (EU) | 15 | 19.0 | 18.7 | -205 |
| Switzerland | 15 | 3.4 | 3.2 | -34 |
Source: US International Trade Administration, Reed Smith Tariff Tracker 2, SBI Research
What will we get from America and what will we have to pay?
This agreement is not one-sided, but ‘reciprocal’. According to the joint statement, America will impose a reciprocal tariff of 18% on Indian goods. This includes clothing, leather goods, shoes, plastics, rubber and some machinery. But the good news is that America will completely remove tariffs on some Indian aircraft and aircraft parts. Also, India will be given special preference for automotive parts.
In return, India has also shown great heart. India will reduce or eliminate tariffs on American industrial goods and many agricultural products. This means that in the coming days, things like dry fruits (tree nuts), fresh and processed fruits, soybean oil, and wine coming from America may become cheaper in your market. Apart from this, India has also promised to reduce duty on products like ‘Dried Distillers’ Grains’ and ‘Red Sorghum’ for animal feed.
500 billion dollar mega deal
The most significant aspect of this agreement is the promise in which India has expressed its intention to purchase 500 billion dollars (billions of rupees) from America in the next 5 years. This includes energy products, aircraft and their parts, precious metals and coking coal. This deal will take the relations between the two countries to a new height.
Along with this, the rules are also changing for the digital world. India has agreed to remove the ‘Digital Services Tax’ imposed there. Both the countries will now make such rules for digital trade which are not discriminatory. Its effect will be that customs duty will not be imposed on electronic transmission, which will provide great relief to companies working in the field of IT and digital services.
