India recently signed trade deals with Britain, New Zealand and Oman, then sealed the mother of all deals with the European Union (EU). It is believed that only after this the pressure on America for a trade agreement with India increased, because about six months ago, US President Donald Trump had declared India a dead economy while imposing heavy tariffs. But, it was not possible for them to ignore India due to its huge market and fast growing economy.
After the biggest agreement with EU, the agreement with America will prove to be more vital to the Indian economy. Come, let us know at a glance what this agreement is and how beneficial it will prove to be for India….
Labour-intensive sectors like carpet and handicrafts will get a boost
Labour-intensive sectors like textiles, leather and non-leather footwear, gems and jewellery, carpets and handicrafts may get a boost as their exports were being hampered due to high tariffs. There will be a boost in exports of textiles and apparel, chemicals, pharmaceuticals, jewelery and food items like shrimp. India will become competitive with Asian countries like Vietnam and Bangladesh. Sectors like textiles, jewelery and shrimp were affected by the increase in US tariffs in late August.
According to government data, exports to the US in January-November increased by 15.9% compared to the previous year and reached $85.5 billion, while imports reached $46.1 billion. According to the US government’s estimate, two-way goods and services trade in 2024 will amount to $212.3 billion, with a deficit of $45.8 billion in US goods trade and a slight surplus in services trade.
Also read:- India-US Trade Deal: Talks between the two countries are in the final stages, sources claim joint statement may be issued this week
India will increase purchase of these things
India will increase purchases of petroleum, defense equipment, electronics, telecommunication products and aircraft from America. Also, access can be given to some such agricultural products which do not cause loss to Indian farmers. The US agricultural trade deficit with India was $1.3 billion in 2024.
impact on oil purchases
Under the agreement, India will increase oil purchases from America-Venezuela. Indian oil refining companies are reducing oil purchases from Russia and increasing supplies from America, Middle East, Africa and South America. However, it will take time for companies to exit existing Russian contracts. At present, the government has not ordered a complete ban.
What is the duty on steel-aluminium?
Reciprocating tariffs would be reduced, but the US could continue to impose tariffs under Section 232 on steel, aluminum, copper, automobiles, auto parts and some other goods. In such a situation, despite the agreement, some goods exported by India to America will continue to attract higher duties or there will be a gradual reduction in them.
Also read:- How much will India benefit from the trade agreement with America?: The country’s growth rate is estimated to be 6.9%, know the claim
Which goods and services made the biggest contribution in 2024?
India’s main exports to the US in 2024 include pharmaceuticals and biological products (US$8.1 billion), telecommunication equipment (US$6.5 billion), precious and semi-precious stones (US$5.3 billion), petroleum products (US$4.1 billion), vehicles and auto parts (US$2.8 billion), gold and other precious metals jewelery (US$3.2 billion), cotton textiles (including accessories) (US$2.8 billion), and iron and steel products (US$2.7 billion).
Imports included crude oil (US$4.5 billion), petroleum products (US$3.6 billion), coal, coke (US$3.4 billion), cut and polished diamonds (US$2.6 billion), electrical machinery (US$1.4 billion), aircraft, spacecraft and parts (US$1.3 billion) and gold (US$1.3 billion). According to estimates, the import of services from India to the US in the year 2024 is US$ 40.6 billion, of which import of computer/information services is US$ 16.7 billion and import of business management/consultancy services is US$ 7.5 billion.
