India and US move closer to broad trade agreement
The United States and India moved closer to a trade deal by issuing an interim framework that would lower tariffs, reshape energy ties and deepen economic cooperation as they seek to realign global supply chains.
The two governments said in a joint statement on Friday that the framework reaffirmed the commitment to negotiations on a broader bilateral trade agreement, but noted that more negotiations were needed to complete the agreement.
Separately, US President Donald Trump in an executive order removed the 25 per cent additional customs duty on Indian goods for Russian oil purchases as New Delhi “committed to stop importing, directly or indirectly” Russian oil.
However, the order stated that as Washington continues to pressure India to restrict energy ties with Moscow, US officials will monitor and recommend reintroduction of the tariff if India continues to purchase oil from Russia.
The India-US joint statement on Friday made no mention of India buying oil from Russia or any formal commitment by India to approve the move.
Trump announced Monday a deal with India that would reduce U.S. tariffs on Indian goods from 50 percent to 18 percent in exchange for India halting purchases of Russian oil and reducing trade barriers.
Half of the 50 percent rate was also imposed by Trump over India’s purchases of Russian oil, which Moscow said fueled its war efforts in Ukraine.
Trump signed an executive order Friday rescinding that 25 percent after India agreed this week to shift its oil purchases to the United States and Venezuela.
However, the statement stated that New Delhi resisted Washington’s pressure to widely open the agricultural market.
In a social media post about X, Commerce Minister Piyush Goyal said the agreement protects farmers’ interests and rural livelihoods by “fully protecting sensitive agriculture and dairy products”.
But India’s opposition Congress party said it was a deal that compromised national interests, saying the trade deal was signed largely on US terms and hurt farmers and traders.
Friday’s joint statement provides additional details compared to the initial outline of the trade deal Trump unveiled on Monday.
He confirmed that India will purchase US$500 billion ($A713 billion) worth of US goods, including oil, gas, coking coal, aircraft and aircraft parts, precious metals and technology products, over a five-year period.
The last category includes graphics processing units typically used for AI applications and other products used in data centers.
India will eliminate or reduce tariffs on all US industrial products and a wide range of US food and agricultural products, including dried distillers’ grains and red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine and spirits, he said.
But the agreement will impose an 18 percent duty rate on most imports from India to the United States, including textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home decor, craft products and some machinery.
Goyal had said on Thursday that Washington and New Delhi aim to sign a formal trade agreement in March, after which tariff cuts on India’s US exports will come into effect.
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