India-US interim trade agreement to be operational in April: Goyal
What's the story
An interim trade agreement between India and the United States is expected to be operational in April, Union Commerce and Industry Minister Piyush Goyal announced on Friday. A three-day meeting between Indian and US officials will commence on February 23 in the US to finalize the legal text of this agreement, The Hindu Businessline reported. Earlier this month, both countries issued a joint statement confirming that a framework for an interim trade agreement had been established.
Agreement specifics
India to reduce import of Russian crude oil
The interim trade agreement will see India reducing its import of Russian crude oil. In return, the US will eliminate a 25% penalty on Indian shipments. Goyal said that nearly half of India's exports to the US will enter duty-free under this arrangement, while about 35% will be subject to a lower tariff of around 18%. The remaining products, including steel and aluminum, will still be subject to US Section 232 tariffs up to 50%.
Constituents
Salient features of interim agreement
India will eliminate/reduce tariffs on all US industrial goods and a wide range of US food and agricultural products. The United States will apply a reciprocal tariff rate of 18% on originating goods of India. However, generic pharmaceuticals, gems and diamonds, and aircraft parts will be exempt from these tariffs. Meanwhile, India has also agreed to address long-standing non-tariff barriers to the trade in US food and agricultural products, and will also purchase $500 billion of US products.
FTAs update
Implementation of FTAs with UK, Oman, New Zealand
Apart from the India-US interim trade agreement, Goyal also said that India's free trade agreements with the United Kingdom and Oman are likely to be implemented in April. The pact with New Zealand is likely to be implemented by September. These developments are expected to give a major boost to sectors like textiles, machinery parts, auto components, leather, footwear, sports goods, furniture, handicrafts, and handloom products.