Will the Bilateral Trade Agreement (BTA) with the US benefit India?
Will New Delhi sign trade deals with Washington in confirmation of the World Trade Organisation guidelines, or will it be scrutinized by the world trade regulator?
Will the US arm-twist India and impose its whims on the country at a time when Washington suffers a trade deficit with New Delhi and has put immense pressure on the country to shrink the trade gap?
These questions are important as the talks for the BTA will begin soon.
What is Bilateral Trade Agreement?
India is awaiting patiently for appointment of the US Trade Representative.
Donald Trump’s administration is most likely to appoint a representative within weeks, if not days.
After the appointment of the US Trade Representative, the talks for the BTA will begin.
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It will be a long, tortuous, difficult and painful process as both sides are likely to bargain hard and extract as many concessions as possible.
Analysts believe the talks will be based on a reciprocal basis and hinge on a “give and take” relation.
Will BTA Take Care Of Reciprocal Tariffs?
The talks will be held after the US has imposed a 25% tariff on steel and aluminum products.
Donald Trump has also announced to impose tariffs on a reciprocal basis, meaning, the US will impose as much tariffs as India imposes on it.
Though India exports a minuscule fraction of steel and aluminium products, imported by the US, the trade diversion may hit India hard.
Countries like China and Vietnam may dump their surplus products at competitive prices, detrimental for the Indian steel and aluminium industries.
India-US To Discuss Market Access, Tariffs
According to the joint statement issued at the end of Prime Minister Narendra Modi’s meeting with Donald Trump, the two sides will discuss increasing market access, reducing tariff and non-tariff barriers and strengthening supply chains.
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It has been hoped that the bilateral trade may reach $500 billion in 2030.
Considering the fact that the US-India trade is estimated to touch $193 billion with India having a trade surplus of $45 billion in FY 2024-25, it appears to be an ambitious target.
Will US Armtwist India?
Secondly, India may be under pressure to buy more and more to shrink the trade imbalance.
The two countries are also expected to discuss how to increase their exports of US industrial goods while importing labor-intensive products like gems and jewelry, textiles, automotive parts, and engineering parts from India.
India may put pressure on the US to buy more agricultural products as it exported these goods worth $4 billion.
Analysts believe the Donald Trump administration is most likely to use the proposed BTA to push India to buy more and more of its goods and increase the US imports many folds.
Much depends on how India tackles the issue, whether it surrenders to the US pressure or talks tough and extracts many more concessions adopting the concept of reciprocity and “give and take relations” rather than appeasing the other side.
