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New Delhi: India and the US have made "very significant" progress in their negotiations for a trade deal, with New Delhi maintaining steady momentum in talks with Washington for a positive outcome even during the final stages of concluding its free trade pact with the European Union, official sources said on Wednesday.
India's mega trade deal with the EU should not be seen as a response to offset the current state of trade relations with the US as the American market is equally crucial for the Indian exporters, they said.
Very significant progress has been made in the negotiations for the proposed trade deal with the US and the two sides are "very close" to seeing that come to fruition, the sources said.
The two sides remain in touch and even during the final stages of negotiating the EU trade pact, Indian trade negotiators were in contact with their US counterparts as well, the sources said.
"So that work is continuing. We are hopeful of a positive outcome," said a source.
It is also learnt that External Affairs Minister S Jaishankar is travelling to Washington next week to attend a meeting on critical minerals. During the trip, he is expected to meet a number of senior Trump administration officials including Secretary of State Marco Rubio.
The sources also ruled out India reviewing its decision to not join the Regional Comprehensive Economic Partnership (RCEP) that is largely dominated by China.
India and the US held multiple rounds of negotiations last year to firm up the proposed bilateral trade deal. However, the talks hit a roadblock after President Donald Trump slapped a whopping 50 per cent tariffs on Indian goods, including a 25 per cent punitive levy over Russian oil purchases, in August last year.
Apart from the tariffs, the relations came under strain on a number of other issues that included Trump's claim of ending the India-Pakistan conflict in May last year and Washington's new immigration policy.
After India and the European Union announced the free trade agreement to create a market of over two billion people, there have been views that it was a response to the disruptions caused by Washington's policy on tariffs.
There was not a single mention by either side on that (US aspect) as it was not being done because something else was happening in the background, the sources said on the India-EU summit talks on Tuesday.
The US market is as important, if not more important. And we therefore have to keep our eyes on the ball there in terms of wanting to get that trade deal across the finish line as well, the sources said.
The trade deal with the EU is definitely not being done with the spirit of one-upmanship or anything, the sources said, adding it is not that this deal is a major reaction to whatever may or may not have been happening in terms of progress in other deals.
"Our export to the EU is worth USD 76 billion as compared to USD 86 billion to the US. So it's an equally important market for us," said one of the sources, adding, "India and the EU have finalised the trade deal because it is in the mutual interest and mutual benefit of both sides."
The sources, citing the current global trade environment, said the MFN-based WTO (World Trade Organisation) oriented system is under stress and trading partners are trying to navigate the challenging environment.
The Most-Favoured-Nation (MFN) principle is a non-discriminatory pillar of the WTO trading system that requires that any trade advantage granted to one country must be extended to member nations of the WTO.
"India would like to see exports grow both in the US and Europe as we don't see one over the other," the source said.
"We see it should grow in both places because at the end of the day, that will create jobs, that will create more manufacturing," the source added.
The India-EU free trade agreement that will account for almost a quarter of the global GDP will reduce tariffs on 99 per cent of Indian exports to the EU and cut duties on over 97 per cent of the EU's exports to India.
The EU estimated that the deal will cut up to four billion euros in annual tariffs for European exporters.
Indian sectors such as textiles, apparel, leather goods, handicrafts, footwear and marine products are set to gain from the FTA, while Europe is set to benefit in areas of wine, automobiles, chemicals and pharmaceuticals, among others.
Under the provisions of the pact, the EU's wine exports will benefit significantly as the current duties of 150 per cent will see a sharp cut and the new levies will be in the range of 20 per cent to 30 per cent.