India to negotiate US trade pact with patience, protect its interests: Reports

New Delhi: India will negotiate its bilateral trade agreement with the US patiently, while safeguarding its sensitivities in sectors such as dairy, sources said on Saturday.

They said just as the US has sensitivities regarding its peanut butter, India has its own sensitivities concerning the dairy sector.

"We have to be patient. Free trade agreements do not happen overnight. It happens carefully and steadily. We have to carefully analyse things," one of the sources said.

India has protected its dairy sector in all free trade agreements and will continue to do so and safeguard them, they said.

The two countries are negotiating a bilateral trade agreement with an aim to more than double two-way commerce to USD 500 billion by 2030. They are aiming to conclude the first phase of the pact by fall (September-October) this year.

In a trade pact, two countries either significantly reduce or eliminate import duties on the maximum number of goods traded between them. So in this case, both nations could look at cutting taxes for each other.

While the US has imposed an additional 26 per cent import duty on India, its competitor Vietnam is facing 46 per cent tariff, Bangladesh 37 per cent, China 34 per cent, Indonesia 32 per cent, and Thailand 36 per cent.

Both India and the US want to expedite the negotiations for the proposed agreement.

While the US has demanded duty concessions in sectors like certain industrial goods, automobiles, wines, petrochemical products, dairy, agriculture items such as apples, tree nuts, and alfalfa hay; India may look at duty cuts for labour-intensive sectors such as textiles.

In 2024, India's main exports to the US included drug formulations, biological ($8.1 billion), telecom instruments ($6.5 billion), precious and semi-precious stones ($5.3 billion), petroleum products ($4.1 billion), gold and other precious metal jewellery ($3.2 billion), ready-made garments of cotton including accessories ($2.8 billion), and products of iron and steel ($2.7 billion).

Imports included crude oil ($4.5 billion), petroleum products ($3.6 billion), coal, coke ($3.4 billion), cut and polished diamonds ($ 2.6 billion), electric machinery ($1.4 billion), aircraft, spacecrafts and parts (USD 1.3 billion), and gold ($1.3 billion).

In 2023-24, the US was the largest trading partner of India with $119.71 billion bilateral trade in goods ($77.51 billion worth of exports, $42.19 billion of imports, with $35.31 billion trade surplus).