India is moving ahead in its negotiations with the US, setting aside. President Donald Trump’s claim that the former is a “Tariff King” by charging high tariffs on automobiles and alcohol. These negotiations have added a new element – purchase of oil, gas etc., from the US in a determined bid to reduce the trade surplus with India estimated at $ 41bn last year.
Trump has been pressing India to stop oil purchase from Russia as this he believes is fuelling the war with Ukrane. In a sudden development, Trump claimed that he had a talk with Indian Prime Minister Narendra Mode on October 16 and the latter has assured that India’s oil purchase from Russia is tapering off. This claim, however, was not fully acknowleged by the External Affairs Ministry.
Finance Minister has already marshalled facts and figures to disapprove Trump’s claim that India ia a Tariff king in Parliament. She had said that India’s tariff rates are in “Conformity” with the WTO Rules. Infact, the “applied rates” are lower than those approved by Parliament. What is more, the rules approved by Parliament are much lower than the “bound” rates as committed to the WTO. Through successive reforms, the number of tariff had been reduced to eight, including the zero rate, in the last budget 2025-26. She had further said that after changes in the budget, the average customs (import) duty dropped to 10.7 percent from 11.7 percent. The reduction in the number of rates “is to support manufacturing and value addition”. The Government seeks Parliament approval to up the rates, but “effectively you are at a lower level”, she said at an exim bank event in New Delhi.
Experts say there is nothing like “reciprocal” tariffs in global trade rules. It is a term coined by Trump to target at countries such as india which he maintains have high rates on auto and alcohol. In the budget however the rates for motor cycles (completely built) have been cut to 40 percent. A White House fact sheet says the average applied US tariff is 5 Percent compared to 39 percent in India. US charges 2.4 percent on motorcycles. Indian Textiles are charged at 28 percent. The items include mens and boys trousers, breeches and shorts. Certain varieties of Tabacco attract 350 percent and peanuts at over 54 percent. Alcohol is taxed at 100 percent in India as it is classified as a “sin” good like tobacco.
Commerce Secretary Rajesh Agarwal is heading to Washington for further negotiation. However no date has been fixed for the purpose as US is shutdown at present. He believes that there is a movement on both sides trying to see if there are any answers.
Indian exporters can hope to resume shipments to the US with the 25 percent secondary sanctions which New Delhi wants to come down so that other countries do not have a comparative edge. It my be recalled that during the first Trump administration, discussions had taken place on a limited trade deal between the two countries. But for “various reasons” it did not produce an outcome.
Trump possibly prefers bilateral agreement over multilateral agreement or multilateral plurilateral agreements. This means he may be willing to negotiate deals that demonstrate gains to American businesses, at least to his constituency.
China, according to reports will firmly stand with India to uphold the multilateral trade Organisation (WTO) at the core says Chinese ambassador Eu Fei Hong. China strongly opposes Trump administration’s move to impose 50 percent tariffs on India for its oil purchase from Russia. He believes trade should not become a tool to pursue selfish interests. The US has long been benefited from chip to demand exorbitant prices from various countries. There has been friendship and cooperation between India and China has always been the main theme. There might be challenges but unity and cooperation are our only options. Eu Fei Hong says and adds that the economic structures of India and China are highly complementary. “We welcome more Indian goods to enter the chinese market”.
While India appears willing to lower duties on farm goods, it is unlikely to allow generally modified crops. At the same time, New Delhi is seeking duty concessions on labour intensive sectors such as textiles leather goods, gems and Jewellery, chemicals, shrimps etc.,
Recently US Ambassador designate ERGIO GOR said that the US and India are not that far apart on tariff issues and that an agreement is imminent.
India also is keen that the dispute settlement mechanism at the WTO be restored and be the first prority for WTO members and also called for maintaining special treatment for poor and developing countries. At a meeting of trade minister commerce minister Piyush Goyal reiterated India’s opposition to bring any Plurilateral issues such as trade facilititation under the ambit of WTO. China has backed a proposal for investment facilititation which will reduce policy, space for government and is meant to pursue Beijing’s investment agenda.
Further, issues that have been mandated by the WTO and are within the trade framework should get priority and should be the first issue to he resolved, Goyal stressed and urged other members to bring back the focus on issues such as agriculture that have been agreed to by them but a discussion had been pending for more than a decade. He also called for removal of non-tariff barriers.
Further, issues that have been mandated by the WTO and are within the trade framework should get priority and should be the first issue to he resolved, Goyal stressed and urged other members to bring back the focus on issues such as agriculture that have been agreed to by them but a discussion had been pending for more than a decade. He also called for removal of non-tariff barriers.
“We have all collectively agreed to strengthen the working of the WTO to ensure that the core principles are respected and work towards global good and global growth, he said.
