Joint Statement on Trade Deal May Be Out Within Five Days; US Would Soon Cut Levy to 18%: Goyal
New Delhi: It is hoped that India and the US will issue a joint statement on their trade deal in the next four or five days, shortly after which Washington would reduce its 50% tariff on Indian goods to 18% via executive order, the commerce minister said on Thursday (February 6).
A “formal agreement” is being hammered out and is expected to be signed by mid-March, minister Piyush Goyal said, with commerce secretary Rajesh Agrawal adding that India can only reduce its tariff on US goods under the deal once this agreement is in force.
“Once the joint statement is there, that … needs to be converted into a legal agreement” in order for India to be able to lower its tariffs, as it implements a most-favoured nation tariff as opposed the US's executive levy, Agrawal told reporters at the signing ceremony for the India-Gulf Cooperation Council free trade deal's terms of reference.
Goyal also noted that the deal agreed to is the first tranche of the Indo-US free trade deal, for which the two sides began their protracted negotiations a year ago.
Addressing US President Donald Trump's statement that India committed to buying goods from his country worth a whopping $500 billion, Goyal suggested these purchases could take place over the next five years.
Citing India's need for energy, data centre equipment and information and communication technology products among other things, he said that “when we estimated what we will need from the USA, we came to a figure of at least $500 billion–we can clearly see before our eyes, as potential that we can procure from the United States of America over the next five years”.
“Our aircraft demand alone – orders placed on Boeing and yet to be placed but ready – are nearly $70-80 billion. If you add the engines and other spare parts it will probably cross $100 billion. Just aircrafts alone,” Goyal added.
Trump first announced the deal on Monday, saying that as part of the pact India would “move forward to reduce their Tariffs and Non Tariff Barriers against the United States to ZERO”.
Washington in exchange would lower its 50% tariff – half of it a ‘reciprocal’ tariff and the remainder a ‘penalty’ for India's purchases of Russian oil – to 18%, with the latter levy eliminated amid what Trump said was Prime Minister Narendra Modi's agreement to “stop buying Russian oil”.
Details of the deal are awaited but Goyal has said since Trump's announcement that it would protect India's sensitive agriculture and dairy sectors, the protected nature of which was reportedly a sticking point in the close-to-year-long trade talks.
US trade representative Jamieson Greer acknowledged that India would continue to retain some protections for its agricultural sector but that it would reduce tariffs on a “vast array” of these goods, including tree nuts, wines, spirits, fruits and vegetables, to zero.
Both Goyal and the external affairs ministry have by saying that India is committed to diversifying its energy procurement suggested that it is moving away from Russian oil, the seaborne variety of which it became the largest buyer after Russia invaded Ukraine close to four years ago now.
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