India-US trade pact: Effort on to facilitate preferential market access for both sides, says Piyush Goyal

Time of India

2 days ago

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India and the United States are keen on providing preferential market access to each other's businesses, with teams from both nations collaborating on a proposed bilateral trade agreement, Commerce Minister Piyush Goyal said on June 2. In February, Donald Trump and Narendra Modi underlined the two sides' intentions to negotiate the initial phase of a mutually advantageous multi-sector Bilateral Trade Agreement (BTA) by the fall of 2025, specifically targeting September-October.This agreement aims to increase bilateral trade from the current figure of $191 billion to $500 billion by the year 2030.Goyal told reporters in Paris, during an official visit, that both nations are dedicated to collaborating and that there is a mutual desire to provide preferential access to each other's businesses.In response to a question regarding Trump's announcement to raise tariffs on steel and aluminum to 50 per cent, Goyal stated that both countries will continue to work on resolving such issues through bilateral discussions."Let's wait and see; both the US and India share a positive relationship and will persist in resolving these matters through dialogue," Goyal said.Trade specialists have indicated that the Trump administration's potential increase in import duties could adversely affect Indian exporters, particularly those involved in value-added steel products and auto components.On May 30, Trump declared his plan to raise the existing 25 per cent tariffs on steel and aluminum imports, effective June 4. The initial tariffs were invoked in 2018, with a 25 per cent tariff on steel and 10 per cent on aluminum, which was later raised to 25 per cent on aluminum in February 2025.In the fiscal year 2024-25, India exported iron, steel, and aluminum products worth $4.56 billion to the US, with key exports including $587.5 million in iron and steel, $3.1 billion in iron or steel articles, and $860 million in aluminum and related products.India has also lodged a formal complaint with the World Trade Organization (WTO), asserting its right to impose retaliatory tariffs on American goods in reaction to the previous steel tariffs. This week, a delegation of US officials is visiting India to discuss the proposed interim trade agreement between the two nations.The significance of this visit is heightened by the expectation that India and the US may reach an interim trade agreement by the end of June, with India advocating for a complete exemption from the 26 per cent reciprocal tariff on domestic goods.Rajesh Agrawal, India's chief negotiator and Special Secretary in the Department of Commerce, concluded a four-day visit to Washington last month, where he engaged in discussions with his US counterpart regarding the proposed agreement. Goyal was also in Washington to further advance trade negotiations. There is a possibility that both nations might finalize an interim trade deal prior to the first phase agreement.For the fourth consecutive year in 2024-25, the US maintained its status as India's largest trading partner, with bilateral trade reaching $131.84 billion. The US contributes approximately 18 per cent to India's total goods exports, 6.22 per cent to imports, and 10.73 per cent to the overall merchandise trade of the country.Regarding India's free trade agreement with the four-nation European bloc EFTA, Goyal clarified that the $100 billion foreign direct investment (FDI) commitment under this agreement does not account for funds entering the stock market through foreign institutional investors (FIIs)."This represents solid FDI coming into the nation... This $100 billion in FDI is accompanied by technologies... It will likely catalyze approximately $500 billion in investments," he stated. He emphasized that such investments would foster the development of a comprehensive ecosystem, leading to the establishment of hotels, infrastructure, and the utilization of power and water resources, thus significantly contributing to the economy. The implementation of this pact is advancing rapidly, with expectations for it to be operational by the year's end.The Trade and Economic Partnership Agreement (TEPA) was signed by the two sides on March 10, 2024. Under this agreement, India has secured an investment pledge of $100 billion over 15 years from the grouping, while allowing several products, including Swiss watches, chocolates, and cut and polished diamonds, to be imported at lower or zero duties.The members of the European Free Trade Association (EFTA) include Iceland, Liechtenstein, Norway, and Switzerland. When queried about the possibility of a similar arrangement in the proposed trade pact with the 27-nation EU bloc, Goyal remarked, "The member countries are significant investors in India, so we may not pursue that avenue in our FTA with the EU."