India-US Trade Negotiations

India and the United States are initiating virtual sector-specific discussions aimed at a new trade agreement. These discussions are designed to pave the way for in-person negotiations on key sectors, with an objective to finalize areas for swift negotiation by the end of May.

Negotiation Strategy

• The discussions will help identify areas that require more time and those that can be concluded quickly.
• Both nations are working under an aggressive schedule to balance mutual trade interests, considering tariff sensitivities and broader economic policies.

Tariff Context

• On April 9, the US paused country-specific reciprocal tariffs for 90 days, excluding China, to mitigate recession and inflation fears.
• India currently faces a 10% ad valorem tariff on exports to the US, above the existing MFN tariff.
• New Delhi may have a 'first-mover advantage' since trade talks were initiated before the tariff pause.

Trade Agreement Timeline

• In February, both countries announced plans to finalize the first tranche of a multi-sectoral bilateral trade agreement (BTA) by fall 2025.
• An interim trade deal is being explored for possible completion by July 9, contingent on ongoing negotiations.

Challenges and Considerations

• There are concerns about completing a deal within 90 days, as stated by Biswajit Dhar, Distinguished Professor at the Council for Social Development.
• India must ensure that its market access and regulations are negotiated bilaterally and not disproportionately disadvantageous.
• Changes in India's patent laws, if pressured by the US, must be implemented on an MFN basis for all countries.

Focus Points

• Finalize areas for swift negotiation by May-end.
• Focus on achievable outcomes by fall 2025.
• Explore an interim trade deal by July 9.