India, US Target $500 Billion Trade Deal Amid Accelerated Bilateral Talks

A senior Indian delegation will travel to Washington next week to tackle unresolved issues before they engage in negotiations for the eagerly awaited US-India Bilateral Trade Agreement (BTA). The three-day talks, starting April 23, will be the first in-person meeting between the two countries since they agreed on the terms of reference for the trade pact. The Indian delegation will be led by Rajesh Agrawal, who is currently an additional secretary in the Department of Commerce and is set to become Commerce Secretary on October 1.

This visit comes quickly on the heels of similar reciprocal engagements, one of which was a recent US delegation that visited India. That delegation was led by Brendan Lynch, the Assistant US Trade Representative for South and Central Asia. These kinds of visits are clearly by design, intended to serve as building blocks for the momentum that the BTA seems to be gaining on the way to something more formal. In other words, as signals go, it's a pretty strong one.

Scope of the Agreement and Strategic Timing

The trade deal that is being proposed is expected to be very comprehensive, covering 19 main areas. These are: 1. Trade in goods 2. Trade in services 3. Investment 4. Customs facilitation 5. Intellectual property rights 6. Government procurement 7. Labor 8. Environment 9. Trade remedies 10. E-commerce and digital trade 11. Trade in agricultural goods 12. Trade in services 13. Cross-border data flows 14. Trade in 21st Century goods and services 15. Trade and economic implications of AI 16. Labor rights 17. Environmental concerns 18. Intellectual property rights.

The talks with the US are for trade liberalisation, underscored Commerce Secretary Sunil Barthwal. He laid out the objective – to wrap-up talks as quickly as possible.

Balancing Trade Interests: Key Negotiation Areas

Negotiations will necessitate careful balancing of each nation's priorities. The US is angling for tariff concessions that run the gamut from products like electric vehicles and petrochemicals to wines and a range of agricultural products like apples and nuts. In contrast, India seems poised to push for lower duties on its labor-intensive exports like textiles, leather goods, jewellery, and seafood, as well as on more mainstream service products.

The main subjects of discussion are expected to revolve around two elements: ways to simplify service trade rules and methods to improve the climate for investments. The U.S. has been India’s largest trading partner for four years now, so both sides of the negotiation table have a vested interest in reducing trade barriers. The theme shown here is of unlocking new potential growth avenues.

The current trade between India and the United States stands at approximately USD 191 billion. Nevertheless, both countries have established an assertive objective to elevate that number to USD 500 billion by the year 2030. With the United States representing almost 18 percent of India's goods exports and over 10 percent of total bilateral trade, the imminent negotiations have the potential to create the foundation for a new epoch of economic partnership between the two largest democracies in the world.