India and America are moving fast towards an interim trade deal, tariff will come down to 20%!

Washington. India and America are working fast towards an Interim Trade Agreement, which can bring down the proposed tariff to below 20%. This agreement will put India in a better position commercially than other countries in the region. According to reports, America will not give formal notice of tariff increase to India this week, while many other countries have unexpectedly faced tariffs of up to 50%. Trump has sent letters regarding imposition of tariff to about 20 countries. In which very strict warnings and threats have been given. However, there is no intention of sending any such letter to India right now. The reason for this is the ongoing trade talks between the two countries.

Tariff on India can be brought down to below 20%
Bloomberg quoted sources as saying that this proposed interim agreement will give both countries time for further negotiations, giving India an opportunity to resolve pending issues before a comprehensive agreement. The formal announcement of this agreement can be made through an official statement. According to the report, initially the US had proposed a tariff of 26% for India, but now this rate can be brought down to below 20%. Also, further amendments will be possible under the final agreement. However, the exact timeline of the interim agreement is not yet clear.

If this agreement is finalized, India will join the select countries that have signed trade agreements with the Trump administration. So far only Britain has signed a formal trade agreement with the US. At the same time, countries like Vietnam and the Philippines have been declared tariff rates of up to 20%, while Laos and Myanmar are facing high tariffs of up to 40%. India wants a more favourable deal than the one it reached with Vietnam. Vietnam was shocked by the high tariff rate of 20% and is now seeking a reduction in that rate.

Many countries on Trump’s target
US President Donald Trump told NBC News on Thursday that he is considering imposing a general tariff rate of 15% to 20% on countries that have not yet decided on any special tariff rate with the US. Currently the average tariff rate for most US trading partners is 10%.

Although India started trade negotiations with the US at the beginning of the year, India-US trade relations have seen some tension in recent months. There have also been indications from the Trump administration that additional tariffs may be imposed over India’s BRICS membership. The Indian negotiating team may soon visit Washington to speed up trade talks. According to the report, India has already given its final offer to the US and has clearly taken a ‘non-compromising stance’ on some issues.

India has told its “Laxman Rekha”
The biggest hurdle in the trade talks is the US demand that India allow genetically modified (GM) crops, which India has rejected due to concerns about farmers. Apart from this, non-tariff barriers in the agriculture sector and regulatory challenges in the pharma sector also remain major obstacles. India has made its position clear for this agreement, especially in the agriculture and dairy sectors. Indian negotiators have clearly told the US its “Laxman Rekha”, which includes refusal of concessions on dairy and agricultural products.

India has previously protected its dairy sector in all trade agreements and has taken the same stand this time too. In return, India has offered better market access for US products in labor-intensive sectors like textiles and footwear. A team from the Indian Commerce Ministry is going to visit Washington soon to take this agreement forward. India has already placed its best offer to the Trump administration, making it clear that it will not compromise on certain issues.