Government sources have told CNBC-TV18 that India and the United States are converging on most trade issues and are “very close to a deal” with both the sides engaged in technical discussions on issues like non-tariff barriers.Expressing hope for the 1st tranche of a trade deal soon, government sources indicated that both the sides are negotiating very positively and finding some common ground on pending issues.Stating that the current discussions are not akin to conventional FTA negotiations as reciprocal tariffs aren’t based on WTO norms, government sources clarified that both the sides are bound by confidentiality to not speak about the contours of the deal till it is announced.
Government sources highlighted that India is facing some of the highest US tariffs since August. While the deal is not finalized, no new issues have arisen so far, and India remains hopeful of receiving tariff concessions on its steel and aluminium exports, they said.In August this year, India had described the US tariffs on aluminium and steel as violative of World Trade Organization (WTO) rules and had informed Parliament that it reserves the right to suspend substantially equivalent concessions due to the US’ non-compliance with obligations under the WTO’s Agreement on Safeguards (AoS).
India’s request declinedIndia’s Commerce and Industry Ministry said the US had declined its request for consultations under the WTO AoS regarding tariffs on aluminium, steel and related derivative products. The US had stated that the measures were imposed under Section 232 of its Trade Expansion Act on national security grounds, claiming they fall within the scope of the General Agreement on Tariffs and Trade (GATT) 1994, which allows such exceptions.Despite 50% tariffs imposed on imports by the United States, India’s exports to the US rose to $45.82 billion in the 1st half of the current financial year, 13.3% more than $40.42 billion in same period last year.Earlier this month, the Commerce Ministry had said that India would like to diversify its energy import portfolio, subject to availability at the right price, stating that India can import more crude oil and natural gas worth $12-$13 billion from the US without altering the configuration of refineries.On the India-US trade talks, the Commerce Ministry had said that the US is in a shutdown and with a reduced workforce, the time isn’t right for a full-fledged negotiation. Stating that “there is lot of noise in the air” on engagement between the two sides, the Commerce Ministry said that it was heartening to see exports keep pace during global turbulence, with the industry maintaining business relations and supply chains and even absorbing costs.US Ambassador designate to India had recently met India’s top leadership.The Commerce Ministry said that the impact of tariffs on India-US trade will be studied based on commodity-wise data, with an almost certain impact on sectors facing 50% tariffs, adding that October’s trade data will give a firmer picture. The Ministry indicated that while India’s exports to the US are still outperforming last year’s levels, certain segments of the supply chain are facing trade-related challenges.
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