India, US close to finalising trade deal framework, says Commerce Secretary

India and the US are "very close" to finalising the framework for the proposed bilateral trade agreement, Commerce Secretary Rajesh Agrawal said on Monday (December 15), adding that both sides feel that it can be done in a very short period.

The two countries are holding two parallel negotiations-one on a framework trade deal to address the high tariffs and another on a comprehensive bilateral trade agreement (BTA)-following US President Donald Trump’s decision to impose 50 per cent tariffs on Indian goods.

Out of the 50 per cent, 25 per cent are reciprocal tariffs aimed at addressing trade imbalance, while the remaining 25 per cent are a “penalty” for India’s purchase of Russian oil, which Trump claimed was being used by Moscow to fund its war in Ukraine.

‘Can be done quickly’

"We are very close on the framework deal, which we feel can be done in a short period of time. But I would not like to put a time period on that," Agrawal told reporters here.

Asked whether more formal rounds would be held on the BTA, he said talks in the final stage normally do not require such rounds.

“There may not be a formal round, but both physical and virtual meetings will take place close to completion,” the secretary noted.

"So, we are moving in that zone, and we are working tirelessly to see as fast as we can," he added.

Cites New Zealand example

Citing the example of the ongoing talks with New Zealand, the secretary said once "we are in a zone", where a few things or areas are left to be addressed, no formal rounds take place.

With New Zealand, "we are moving towards a closure", he said, adding that talks are happening on a daily basis.

"Last stage (talks) are like the most difficult things where maybe the principals need to take a call at the secretary or minister level," Agrawal pointed out.

In case of the European Union, he said, "We are narrowing down the differences".

The two countries are holding two parallel negotiations -- one on a framework trade deal to address the high tariffs and another on a comprehensive bilateral trade agreement (BTA).

The backdrop

These talks are important as the Trump administration has imposed steep 50 per cent tariffs on Indian goods entering American markets. The outcomes will also have a positive influence on the trajectory of the rupee, which has depreciated to lifetime lows lately and also breached the psychologically important 90-to-a-dollar mark.

The Indian industry and exporters are eagerly waiting for the conclusion of the negotiations and announcement of the deal, as the high import duties are hurting their shipments to America.

What the US wants

Though they are exploring other markets to maintain their export profits, the US is a key destination for them as it accounts for about 18 per cent of the country's exports.

India has stated that the resolution of the US tariffs would be key to firming up the first phase of the trade deal.

As part of the pact, the US is seeking duty concessions on agri products like almonds, corn and apples, and industrial goods. India has strongly opposed any concessions on the agri and dairy sectors. India has stated that it will not compromise the interests of farmers and MSMEs.