‘Very close on trade deal with US’

Competitive tariff advantage important for India, says Commerce and Industry Min Goyal

PTI New Delhi

Commerce and Industry Minister Piyush Goyal on Thursday said that the trade pact with the US is "very close", but it cannot come into force unless India secures a competitive tariff advantage over its competitor nations.  

"The day that happens, the deal is on," Goyal said at the India Global Forum (IGF) UK-India Week event. He is on a three-day official visit to discuss issues related to the implementation of the India-UK free trade agreement. 

The minister held two-day talks with US Trade Representative Jamieson Greer in New Delhi on the first phase of the India-US bilateral trade agreement (BTA). However, a statement by the Commerce Ministry gave no indication that all differences were resolved ahead of the expiry of 10% temporary tariff on July 24. 

A free trade agreement is fundamentally aimed at providing a comparative advantage over competitor countries in terms of market access, Goyal said. "And until the framework of getting that competitive advantage can be finalised, we can't enter into force a US deal. I don't think I can be more transparent than that. So that's broadly the discussions on how the US will find the appropriate tools and legal backing to give us that competitive advantage over our competitors," he added. 

When the framework of the first phase of the BTA was finalised, India had a comparative advantage over its competitor countries, such as ASEAN nations, Sri Lanka, Pakistan and Bangladesh. Under the framework, the US had announced an 18% tariff on Indian goods. At that time, tariffs on India's competing countries ranged from 19% to 20%. But now, all countries face the same 10% additional levy. 

The minister added that the framework or contours of the agreement with the US was finalised and announced on February 6 this year, and both teams have been working since then to finalise the fine print. "There is always a little give and take," he said, adding, "We are very close" to the deal. 

FTA with UK most comprehensive agreement so far: Goyal

The FTA with the UK is the most comprehensive agreement that India has entered into so far and "sky is the limit" in terms of the economic benefits that will flow from it, Goyal said on Thursday.

The minister arrived in the UK on a three-day visit to review the preparedness of both countries for the implementation of the India-UK Comprehensive Economic and Trade Agreement (CETA), which will enter into force from July 15.  

Goyal exhorted businesses in both countries to "seize the moment" and set ambitious targets to boost the estimated £48 billion annual bilateral trading partnership on the back of CETA.  "The UK free trade agreement will be the first most comprehensive agreement that India has entered into so far," said Goyal. "It's a partnership between two complementary economies, two growing economies. We understand each other, the mindset has got a lot of similarities. If our businesses leverage the benefits of the CETA, sky is the limit," he said.