US waters down India trade deal terms

The Trump administration on Wednesday revised the fact sheet on the India-US trade deal, amending some key terms that had raised concerns in New Delhi.

In the amended document, the White House has dropped a mention of ‘certain pulses’ as one of the trade items on which the US claimed India would reduce import tariffs, as per the interim pact between the two countries.

The altered fact sheet also replaces the word ‘commitment’ with ‘intends to’ in reference to the $500 billion in energy purchases from the US that New Delhi plans to make over five years.

The US has also deleted a line on the removal of ‘digital services taxes’ from the earlier version of the fact sheet uploaded on the White House website on Tuesday.

The updated text has been watered down to, “India committed to negotiate a robust set of bilateral digital trade rules that address discriminatory or burdensome practices and other barriers to digital trade.”

As per the World Trade Organization (WTO) norms, trans-border e-commerce transactions like e-books and software do not attract customs duties.

Many countries, including India, have complained of revenue loss due to these practices as they have been seeking to tax such electronic transmissions.

The revised version comes in the wake of sharp reactions, especially about agricultural produce that accounts for almost a fifth of India’s GDP, with the Opposition questioning the Modi government’s repeated commitments to shield the agriculture and dairy sectors from the US goods.

The first fact sheet had listed 'certain pulses' among the products for which India would reduce tariffs.
This was not mentioned in the ‘joint statement’ released by India’s Ministry of Commerce and Industry last week.

Speaking to reporters in Nuremberg on Wednesday, Commerce Secretary Rajesh Agarwal told the media that based on the interim pact, the final legal agreement is likely to be signed before March-end.

"Wherever there is a little sensitivity, we have used tariff rate quota mechanisms to ensure that any market access is limited in nature and it doesn't impact our farmers," he added.

The initial version of the White House fact sheet and joint statement also differed about the imports of red sorghum, which the joint statement qualified, would be permitted, for 'animal feed'. The first fact sheet released by the White House stated that India would reduce tariffs on red sorghum in general.

Another significant change in the revised fact sheet released Wednesday is the exclusion of the word 'other agricultural goods'. Its mention had raised apprehensions in the domestic circles that the US may use this open-ended clause in the interim agreement to expand the list of tariff-free imports into India in the final document.

The updated version of the fact sheet now says, "India will eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products, including dried distillers' grains (DDGs), red sorghum, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, and additional products."

After the announcement of the initial framework by the two sides last week, after a telephonic conversation between PM Narendra Modi and US President Donald Trump, India had claimed the agreement would protect its sensitive sectors like farming and dairy.