India, US Aim to Finalize Partial Trade Deal Amid Tariff Uncertainty
India and the United States have agreed to finalize a portion of a bilateral trade deal by the end of this year, though no clear indications were given regarding tariff exemptions for India.
Key Developments:
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Bilateral Trade Agreement (BTA):
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Trade talks in New Delhi resulted in a mutual understanding to work toward a multi-sector Bilateral Trade Agreement (BTA).
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The first tranche of the agreement is expected to be finalized by fall 2025, according to India’s commerce ministry.
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Tariffs & Market Access:
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Discussions focused on market access, reducing tariff and non-tariff barriers, and enhancing supply chain integration.
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However, no immediate relief was indicated ahead of the April 2 implementation of new US tariffs.
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Impact of Tariffs on India:
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India Ratings and Research estimates that the tariffs could lead to an export decline of up to $7.3 billion in the next fiscal year.
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India has attempted to ease trade tensions by reducing tariffs on high-end motorcycles and bourbon whiskey over the past two months.
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Unresolved Issues & Future Negotiations:
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Reports suggested that India may be willing to lower tariffs on cars, electronics, and medical services, but no official confirmation has been provided.
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The Indian Express cited a government official stating there was “substantial convergence” on the trade deal’s framework, though the terms of reference remain undefined.
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Additional Economic Pressure:
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India may face further challenges due to the US decision to impose a 25% tariff on countries purchasing oil from Venezuela, a key crude supplier for India.
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While President Trump previously criticized India as “one of the highest tariffing nations in the world,” he later suggested that trade relations with New Delhi would “work out very well” without providing specifics.
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Despite ongoing negotiations, the absence of immediate tariff relief suggests that India will need to navigate potential economic setbacks due to US trade policies. While progress has been made towards a long-term trade agreement, the upcoming tariff regime and lack of finalized trade terms indicate continued trade tensions between the two nations.
