Washington, DC: India will grant the United States some limited access to its market for agricultural products but maintain key protections, officials from the two countries said on Tuesday as the outlines of a tariff-reducing trade deal between US President Donald Trump and Indian President Narendra Modi started to emerge.
US trade representative Jamieson Greer told CNBC that the deal would reduce India’s tariffs on American industrial goods to zero from about 13.5% and eliminate duties on US tree nuts, fruits, vegetables, wine and spirits. In exchange, the United States will reduce its tariffs on Indian goods to 18% from 50%.
The agreement hands Trump a welcome economic and foreign policy win on the trade front amid domestic political turmoil after the killing of two US citizens by federal agents during a crackdown on immigrants in Minneapolis.
An Indian government official told Reuters on Tuesday that India would gradually ramp up purchases of U.S. petroleum, aircraft, defense and telecom goods and pharmaceuticals as part of the deal, which includes a multi-year commitment to buy $500 billion in American goods.
“It will be done over the years,” the official said, adding that a more comprehensive pact between the world’s two largest democracies would be negotiated over the coming months.
The deal does include an immediate reduction in tariffs on American cars, the official added.
Reports said neither side provided a start date for the trade deal. Greer said that US and Indian officials were still putting terms on paper. A US official said the goal was to complete that work this week or soon thereafter.
The deal also calls for India to halt its purchases of Russian oil in exchange for lowering U.S. tariffs on Indian goods and eliminating a 25% punitive duty related to Russian oil that Trump imposed last August.
That move was aided by US moves to ease sanctions on the sale of Venezuelan oil and an explicit offer by the United States to India to resume its purchases, the U.S. official said.
“It’s objectively a big deal that we locked down a trade deal with India and resolved this longstanding oil issue that the former Biden administration had also raised,” the official said. “There’s two historic outcomes that came out of this.”
