US-India trade agreement
The framework of an interim trade agreement between India and America has been decided. Under this, India will get better access to the American market in many areas. The agreement also paves the way for further negotiations on a major bilateral trade agreement between the two countries, which was initiated by President Donald Trump and Prime Minister Narendra Modi this year. This framework focuses on mutual and balanced trade, so that both countries can get concrete benefits and the supply chain can become stronger.
Tariff relief plan on Indian exports
Under the framework, America will impose a reciprocal tariff of 18% on Indian goods. But after the completion of the interim agreement, America has promised to remove this tariff from many Indian products. These include generic medicines, diamonds, gems and aircraft parts. This will give a big advantage to Indian exporters in those sectors where India is already strong.
Better opportunity for aircraft and auto parts
America will remove tariffs imposed on some aircraft and aircraft parts coming from India, which were earlier imposed on aluminum, steel and copper in the name of national security. Apart from this, India will also get special tariff quota on auto parts. This will give Indian auto part companies an edge over other countries in the American market.
Medicines also included
Indian generic medicines and pharma ingredients have also got a place in this agreement. However, this will depend on the results of a US investigation (Section 232). With this, Indian pharmaceutical companies will continue to have access to the American market.
Special access to other sectors also
Both countries have agreed to provide each other with continued special market access in preferred sectors. Also, rules of origin will be decided so that only India and America get the benefits.
Relaxation of standards and rules
To ease trade, both the countries will discuss standards and inspection procedures in some sectors, so that the problems of Indian exporters are reduced.
Scope for further tariff cuts
America will also consider reducing further tariffs on India’s demand in the upcoming major trade agreement.
Focus on technology and supply chain
In this agreement, special emphasis has been laid on technology, products like data centres, GPU and strengthening the supply chain. Both the countries will now work towards implementing this framework soon and finalizing further major trade agreements.