Unlock the Editor’s Digest free of charge
Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly publication.
India has supplied “deep” cuts to its import tariffs on a swath of products in talks with the US, however is looking for to retain its excessive levies on delicate agricultural commodities corresponding to foodgrains and dairy merchandise, in response to two folks with information of the negotiations.
The federal government of Prime Minister Narendra Modi is racing to safe a preliminary commerce settlement with the US to forestall President Donald Trump’s threatened imposition of a 26 per cent “reciprocal tariff” on all Indian items from July 9.
“There’s a risk of a really deep tariff discount from India beneath the bilateral commerce settlement,” stated one of many folks acquainted with India’s stance on the talks, who requested to not be recognized as a result of they had been confidential. “However that is topic to a really balanced final result for each side.”
The folks with information of the talks declined to provide particulars of the vary of US items on which New Delhi had supplied to considerably minimize tariffs as a result of the negotiations had been at an “early stage” and may be sophisticated by any backlash from affected industries.
However they stated India’s commerce negotiators had signalled flexibility on much less delicate farm merchandise corresponding to almonds, that are presently topic to tariffs of as much as 120 per cent, and New Delhi may additionally minimize its tariffs of two.5 to three per cent on imported oil and gasoline.
Indian commerce officers have privately stated any opening to the US would largely mirror that seen in different latest commerce pacts. In a deal with the UK agreed this month, India agreed to chop tariffs on alcoholic spirits, automobiles together with electrical autos and automobile components, and engineering items.
The descriptions of India’s provide thus far recommend it should fall far wanting expectations voiced by Trump final month, when he stated: “They’ve supplied us a deal the place mainly they’re keen to actually cost us no tariff.”
India’s commerce negotiators had been taking a agency line on retaining its hefty duties on core agricultural commodities corresponding to wheat, rice and maize and on dairy merchandise, sectors that make use of hundreds of thousands of Indians, the 2 folks stated.
India presently imposes tariffs of 70-80 per cent on US rice and of 30-60 per cent on American dairy merchandise.
For its half, New Delhi has pushed Washington to chop US tariffs for items made by labour-intensive industries together with gems and jewelry, textiles, footwear, leather-based and handicrafts, the folks stated.
Modi’s authorities would additionally push for social safety cost exemptions for Indian employees posted to the US on short-term visas. India has requested Washington to grant this earlier than and gained the same concession from the UK in the agreement introduced this month.
India’s commerce ministry declined to remark. The White Home, US commerce division and workplace of the US commerce consultant didn’t instantly reply to requests for remark.
Trump in early April paused for 90 days the “reciprocal tariffs” he imposed on India and scores of different nations, however retained a blanket import responsibility of 10 per cent.
India, which has a number of the world’s highest common tariffs, is now dashing to safe a framework settlement with the US. Indian commerce minister Piyush Goyal met US counterpart Howard Lutnick and US commerce consultant Jamieson Greer in Washington final week.
The 2 nations say they plan to agree the primary tranche of a bilateral commerce settlement by the autumn and to greater than double bilateral commerce to $500bn by 2030.
India, the world’s largest milk producer, has efficiently pushed to guard huge, politically delicate sectors corresponding to dairy in different latest commerce pacts, together with one with Australia in 2022. India has virtually 200,000 dairy co-operative societies totalling about 15mn members, primarily small herding households.
India and the US have two of the world’s three largest farming sectors, however New Delhi has since independence in 1947 saved excessive tariff partitions round agriculture, which employs almost half of the workforce of the world’s most populous nation. Agriculture is a delicate matter for the Modi authorities, which was in 2021 pressured to abandon legislation reforming the sector after mass farmer protests.
India has made comparable calls for to guard dairy and different delicate farming sectors in commerce talks with the EU, in response to senior European diplomats and Indian officers in New Delhi. Nevertheless, the negotiations with Washington are significantly difficult because the US is India’s largest buying and selling companion, and Trump has ceaselessly criticised its excessive import levies, as soon as even calling it a “tariff king”.
Trump final week criticised iPhone maker Apple’s plans to increase manufacturing in India, which has already helped make cellphones one of many nation’s greatest exports to the US.
