The national flags of US and India.
Credit: Reuters File Photo
New Delhi: India and the US are planning to negotiate a trade agreement and both countries will focus on increasing market access, reducing import duty and non-tariff barriers, and enhancing supply chain integration, Parliament was informed on Tuesday.
In a written reply to the Lok Sabha, Minister of State for Commerce and Industry Jitin Prasada said that as on date, reciprocal tariffs have not been imposed by the US on India.
"Both countries plan to negotiate a mutually beneficial, multi-sector Bilateral Trade Agreement. Both countries would focus on increasing market access, reducing tariff and non-tariff barriers, and enhancing supply chain integration," he said.
The US issued Memorandum on Reciprocal Trade and Tariffs on February 13, wherein the Secretary of Commerce and United States Trade Representative are to take necessary actions to investigate harm to America from any non-reciprocal trade arrangements adopted by trading partners and provide a report with detailed proposed remedies for each trading partner.
Tariffs are import duties imposed and collected by the government and paid by companies to bring foreign goods into the country.
During the visit of Prime Minister Narendra Modi to Washington last month, India and the US announced their commitment to more than double the two-way commerce to Rs 43,57,850 crore ($500 billion) by 2030 and negotiate the first tranche of a mutually beneficial, multi-sector Bilateral Trade Agreement (BTA) by fall of 2025.
In 2023, the US-India bilateral trade in goods and services stood at Rs 16,56,604 crore ($190.08 billion) [Rs 10,79,726 crore ($123.89 billion) in goods and Rs 5,76,865 crore ($66.19 billion) in services trade]. That year, India's merchandise exports to the US stood at Rs 7,30,390 crore ($83.77 billion), while imports were Rs 3,49,826 crore ($40.12 billion), leaving a trade gap of Rs 3,80,638 crore ($43.65 billion) in favour of India.
During 2021-24, America was India's largest trading partner. The US is one of the few countries with which India has a trade surplus.
Prasada also said that India continues to engage with the US to achieve enhancement and broadening of bilateral trade ties in a mutually beneficial and fair manner.
"This is an ongoing exercise, and Indian exporters are working towards diversifying trade baskets and export destinations," he said.
In 2023-24, India has exported engineering goods worth Rs 1,53,655 crore ($17.62 billion). The other major goods included electronics [Rs 87,162 crore ($10 billion)], gems and jewellery [Rs 86,297 crore ($9.9 billion)], petroleum products [Rs 50,818 crore ($5.83 billion)], textiles [Rs 40,989 crore ($4.7 billion), marine products [Rs 21,792 crore ($2.5 billion)].
In a separate reply, the minister said India's tariff policy aims to regulate trade, protect domestic industries, and generate revenue through taxes on imported and exported goods.
"Recent reforms have focused on streamlining the tariff structure and facilitating trade," Prasada said.
India is a member of the World Trade Organisation (WTO) and bound to its maximum tariff that can be applied on a product category. The applied tariffs are generally below the bound tariff for a given commodity line.
"With the changing trade scenario, India is moving towards having Preferential/Free Trade Agreements wherein customs tariffs and non-tariff barriers are reduced or eliminated on substantial trade between the PTA/FTA members," he added.
At present, India is a member of 13 FTAs and 9 PTAs apart from the negotiations with the EU, the UK, and Oman.