Synopsis : India and the United States are fine-tuning their interim trade agreement, with proposed tariff cuts and sector-specific adjustments boosting market optimism. However, ambiguity remains around energy imports, agriculture, textiles, and the overall scale of bilateral trade commitments.
The recently announced Interim India–U.S. Trade Agreement has injected fresh optimism into Indian markets, largely on expectations that tariffs on Indian exports to the U.S. could be lowered to around 18%. The February 7 joint statement from both governments, however, left many questions unanswered, sparking debate over the true scope and depth of the arrangement.
Trade officials on both sides are now engaged in tweaking the draft to address sensitive areas where national interests and political considerations intersect. Four sectors in particular—oil, agriculture, textiles, and overall import values—have emerged as key pressure points.
1. Oil and Energy Imports
One of the most contentious claims is that India has stopped buying Russian oil as part of the deal. Indian officials have not confirmed any blanket halt. Instead, India continues to emphasise that its energy sourcing decisions are guided by price stability, supply security, and national interest, rather than explicit trade-linked conditions.
2. Agriculture and Market Access
Agriculture remains politically sensitive in India. While the U.S. is seeking greater access for its farm products, New Delhi is pushing to protect domestic farmers from import surges. Reports suggest that references to specific items such as pulses may be softened or removed from the draft to avoid backlash and maintain policy flexibility.
3. Textiles and Labour-Intensive Exports
India is keen to secure lower tariffs and better market access for textiles, apparel, and footwear—sectors that employ millions. The proposed tariff reduction framework could significantly enhance the competitiveness of Indian exporters in the U.S. market.
4. Overall Trade and Import Commitments
Another area under scrutiny is whether India has agreed to fixed targets for increasing imports from the U.S. Officials indicate that any commitments will likely be indicative rather than binding, allowing room for market-driven adjustments.
When Will the Final Deal Be Signed?
While the interim pact has been unveiled, a formal, comprehensive agreement is expected later in the year after further negotiations and legal vetting. Both sides appear intent on using the interim deal as a confidence-building step toward a broader strategic economic partnership.
For now, the evolving framework reflects a balancing act—boosting trade and investment while safeguarding domestic priorities on energy security and agriculture.
Disclaimer : This article is for informational purposes only and is based on publicly available information and reports. It does not constitute legal, financial, or investment advice.
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