NEW DELHI: The US and India have announced reaching a trade agreement after months of friction, with President Donald Trump saying that Prime Minister Narendra Modi had \u201cagreed\u201d to halt purchases of Russian oil.<\/p>\n
In August, Trump accused India, which imports most of its crude oil, of funding Moscow\u2019s war in Ukraine and subjected it to a combined tariff rate of about 50 percent on most of the exports.<\/p>\n
Following a call with Modi on Monday, Trump took to social media to say that he would cut with immediate effect US levies on Indian goods to 18 percent after Modi \u201cagreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela.\u201d<\/p>\n
At the same time, India, Trump wrote, would \u201creduce their Tariffs and Non Tariff Barriers against the United States, to ZERO,\u201d committing to buy \u201cover $500 BILLION DOLLARS of US Energy, Technology, Agricultural, Coal, and many other products.\u201d<\/p>\n
Modi confirmed the agreement on social media, saying: \u201cMade in India products will now have a reduced tariff of 18 percent,\u201d without commenting on Russian oil or duty-free imports of American goods.<\/p>\n
When the US announced its punitive tariffs last year, India quickly moved forward with free trade negotiations with other countries \u2014 signing a deal with Oman and finalizing negotiations with New Zealand and the EU.<\/p>\n
While the agreements were expected to partially offset the loss of exports to the US, economists did not expect they would immediately mitigate it, as shifting supply chains takes time.<\/p>\n
The newly announced agreement with the US will therefore offer short-term relief for Indian exporters \u2014 especially of textiles, gems, jewelry and marine products \u2014 who were facing the threat of a market exit.<\/p>\n
\u201cIn that case, the trade deal with the US is a welcome step. It provides short-term relief, allowing India to continue exporting to the US without being forced to exit the US market and diversify with a huge transition cost,\u201d said Anisree Suresh, geoeconomics researcher at the Takshashila Institution.<\/p>\n
\u201cHowever, one shouldn\u2019t look at it as a comprehensive long-term trade deal like the one India signed with the EU. The unpredictability of the Trump administration remains a major concern, regardless of whether there is a trade deal with the US … India cannot treat this deal the same as other FTAs, as it is limited in scope and subject to reversal.\u201d<\/p>\n
When the US imposed its punitive tariffs on India, about 66 percent of total Indian exports were subject to that rate. Overall, India recorded a negative margin of 19.5 percent, meaning its exports were taxed more heavily than those of its competitors.<\/p>\n
\u201cFrom that point of view, Indian goods will have a larger market over there. However, there\u2019s a problem when we talk about a 0 percent tariff on the US,\u201d said Prof. Arun Kumar, a development economist.<\/p>\n
\u201cThe US will be able to export a lot more to India, and therefore it will affect our production within the economy. And that will be a setback, so while exports may rise, the internal economy may actually suffer because of this decrease in tariffs on American goods. And especially if it affects agriculture.\u201d<\/p>\n
The sudden withdrawal from India\u2019s partnership with Russia may not have a serious economic impact but politically could affect New Delhi\u2019s relations, also with other countries, especially those from BRICS \u2014 a grouping that besides India and Russia includes also Brazil and China, and is the most powerful geopolitical forum outside of the Western world.<\/p>\n
\u201cYou can always substitute Russian oil with some other oil, but I think it\u2019s more of a strategic question, because India and Russia have had long-standing relationships, and if we bend to US pressure and reduce purchases from Russia, then it will affect in future also our relationship with Russia, because we will not be seen as a stable ally,\u201d Kumar said.<\/p>\n
\u201cBRICS nations will not trust India very much in the future … and that\u2019s what Trump wants. He wants to disrupt BRICS. That\u2019s what he has been doing right since the beginning to divide nations and deal with them individually.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
NEW DELHI: The US and India have announced reaching a trade agreement after months of friction, with President Donald Trump saying that Prime Minister Narendra Modi had \u201cagreed\u201d to halt purchases of Russian oil. In August, Trump accused India, which imports most of its crude oil, of funding Moscow\u2019s war in Ukraine and subjected it …<\/p>\n","protected":false},"author":4,"featured_media":93219,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-93198","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-world"],"_links":{"self":[{"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/posts\/93198","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/comments?post=93198"}],"version-history":[{"count":1,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/posts\/93198\/revisions"}],"predecessor-version":[{"id":93220,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/posts\/93198\/revisions\/93220"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/media\/93219"}],"wp:attachment":[{"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/media?parent=93198"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/categories?post=93198"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/tags?post=93198"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}