India should pursue services-focused trade deal with US: NITI Aaayog

Time of India

11 hours ago

NITI Aayog on Monday suggested that India should follow the model of the India-UK agreement to pursue a services-oriented trade deal with the US, with special focus on information technology, financial services, professional services, and education.
The Aayog in its third edition of 'Trade Watch Quarterly' said there will be significant opportunities for India in the US markets both in terms of the number of products and volume of the US market.
"Building on the model of the India-UK agreement, India should pursue a services-oriented trade deal with the US, placing strong emphasis on key sectors such as information technology, financial services, professional services, and education," it said.
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The government think tank said the agreement should include robust provisions for digital trade, creating a framework for enhanced cross-border service delivery. The Aayog also emphasised that India must advocate for improved visa access for its professionals, particularly under H-1B and L-1 categories.
"This should include provisions for intra-corporate transferees and independent service providers, which are crucial for maintaining India's competitive edge in the global services industry," it said.
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With growing global demand for Digitally Delivered Services (DDS), the Aayog said India should seek firm market access commitments from the US in high-growth areas such as cybersecurity, artificial intelligence, telecom, and design services.
"Leveraging India's strengths in these sectors can help increase bilateral trade and innovation-led growth," it said.
Observing that regulatory barriers such as inconsistent data compliance and intellectual property concerns hinder Indian service exports, the Aayog said joint efforts between India and the US are needed to simplify licensing procedures and address cross-border data flow issues, enabling smoother market access for Indian firms.
The government think tank also said that to expand professional opportunities, India should push for broader Mutual Recognition Agreements (MRAs) that cover a wider range of professions, including engineers, architects, and healthcare workers.
"These agreements would streamline certification processes and facilitate the mobility of Indian professionals to the US," it said.
According to the Aayog, India should focus on diversifying its trade partners and becoming integral to larger global supply chains and production networks.
"Fast-tracking free trade agreements, time-bound negotiation roadmap, is essential," the Aayog said, adding that these agreements should prioritise the reduction of non-tariff barriers and facilitate smoother trade in services, a key strength for India.
Simultaneously, the Aayog said deeper trade engagement with countries such as Australia, Japan, South Korea, and ASEAN nations can be highly beneficial, especially in sectors where India's export strengths, such as pharmaceuticals, automobiles, and IT, match their import needs.
"Additionally, pivoting towards African markets by developing a structured India-Africa trade corridor focused on pharmaceuticals, education services, IT, and cost-effective machinery will tap into the growing demand and expand India's export footprint into emerging regions," it said.
Meanwhile, an Indian commerce ministry team has reached Washington for another round of talks on the proposed bilateral trade agreement (BTA), which will begin on Monday.
The visit assumes significance as both sides have to iron out issues in sectors like agriculture and automobiles. It is also important as the US has further postponed the imposition of additional tariffs on several countries, including India, until August 1.
Earlier this month, the Indian team was in Washington for talks, with negotiations taking place from June 26 to July 2. The team has once again reached the US for negotiations. India has hardened its position on the US demand for duty concessions on agri and dairy products.
New Delhi has, so far, has not given any duty concessions to any of its trading partners in a free trade agreement in the dairy sector. India is seeking the removal of this additional tariff (26 per cent). It is also seeking the easing of tariffs on steel and aluminium (50 per cent) and the auto (25 per cent) sectors.
Against these, India has reserved its right under the WTO (World Trade Organization) norms to impose retaliatory duties. US President Donald Trump announced heavy tariffs on a number of countries, including India, on April 2. However, it was soon postponed for 90 days until July 9 and later to August 1.
The two countries are looking to conclude talks for the first tranche of the proposed bilateral trade agreement (BTA) by fall (September-October) this year. Before that, they are looking for an interim trade pact.