NEW DELHI – India and the United States have announced their commitment to strengthen their bilateral trade relationship, with the aim of reaching a $500 billion trade target by 2030. This comes after a February meeting between Indian Prime Minister Narendra Modi and U.S. President Donald Trump, where the two leaders agreed to work towards a trade deal by fall this year.
Speaking to the media on Friday, External Affairs Ministry spokesperson Randhir Jaiswal stated that the objective of the bilateral trade agreement is to enhance and deepen the trade in goods and services between the two countries. This would include reducing trade barriers such as tariffs and non-tariff barriers, and promoting greater supply chain integration.
President Trump has been vocal about his dissatisfaction with the trade barriers imposed by India, particularly the high tariffs on U.S. imports. In his recent remarks at the White House, he accused India of charging “massive tariffs” and pressuring them to cut duties on U.S. goods. However, Indian officials have not yet responded to these comments.
Despite the pressure from the U.S., India has taken a conciliatory approach towards trade negotiations, opting for dialogue rather than confrontation. This is driven by the desire to maintain a strong strategic partnership with the U.S. and avoid any potential trade tensions that could disrupt this relationship. India has already taken steps to reduce tariffs on certain U.S. imports such as high-end motorcycles and bourbon, as a gesture of goodwill.
Trade analyst Biswajit Dhar, based in New Delhi, explains that the U.S. is India’s largest export market and the country does not want to jeopardize this relationship. He also highlights the importance of maintaining a balance between economic interests and strategic partnerships.
While India has not been affected by the U.S. tariffs so far, the impending announcement of reciprocal tariffs by President Trump could have an impact on Indian exports in various sectors, including pharmaceuticals, drugs, and auto components. In 2019, the two-way trade in goods between India and the U.S. exceeded $129 billion, with Indian exports surpassing $87 billion.
To address these concerns, Indian Commerce Minister Piyush Goyal recently visited Washington to hold discussions with U.S. officials, including Commerce Secretary Howard Lutnick. During his visit, Lutnick emphasized the need for India to reconsider its tariffs and open up its market to U.S. goods, citing the “special relationship” between the two countries.
Lutnick also urged India to increase purchases of military equipment from the U.S., as a means of reducing the trade deficit. Currently, India has a trade surplus with the U.S., which stood at over $40 billion in 2019. This could be balanced by purchasing more defense equipment from the U.S., rather than relying on imports from Russia.
However, the issue of agricultural imports remains a sensitive topic for India. The country has long resisted opening its market to U.S. farm products, citing concerns about the impact on small farmers. Ajay Srivastava, founder of the Global Trade Research Initiative think tank in New Delhi, believes that India can lower tariffs on most industrial goods, but agriculture remains a sensitive issue due to the livelihoods of over 700 million farmers who depend on it.
Experts also warn that the issue of agricultural imports could become a sticking point in the negotiations between India and the U.S. as the two countries work towards a trade deal. Trade analyst Biswajit Dhar believes that India will not budge on its stance on agriculture, as it is not just a trade issue but a matter of livelihood for millions of farmers.
In conclusion, India and the U.S. are making efforts to strengthen their bilateral trade relationship by addressing trade barriers and increasing market access. Both countries recognize the importance of maintaining a strong economic and strategic partnership, and are working towards a mutually beneficial trade agreement. However, the issue of agriculture remains a sensitive topic and could pose a challenge in the negotiations. With a positive and cooperative approach, it is hoped that a successful trade deal can be reached by fall this year.
