Are India and the US Making Progress in Trade Talks?

India and the United States are currently engaged in active trade deal negotiations, despite recent tensions attributed to tariffs and differing policy priorities. This engagement is underscored by comments from Sergio Gor, the new US ambassador to India, who emphasised the importance of the bilateral relationship and the ongoing discussions aimed at finalising a trade agreement.

Last updated: 27 October 2023 (BST)

What’s happening now

During a visit to Delhi, Ambassador Sergio Gor highlighted the ongoing trade negotiations between India and the US, indicating that a call to further discuss the deal is scheduled. His comments reflect a commitment from both nations to enhance their economic ties despite recent challenges, including significant tariffs imposed by the US on Indian goods. These developments come at a time when relations between the two countries have been tested, raising questions about the future of their trade partnership.

Key takeaways

US-India trade deal negotiations are ongoing, with a call scheduled for Tuesday.
Ambassador Gor reiterated the importance of the US-India relationship, calling it potentially the "most consequential" partnership of the century.
Disagreements over tariffs and India’s purchase of Russian oil have strained negotiations.

Timeline: how we got here

Here’s a brief timeline highlighting key events in the US-India trade negotiations:

August 2022: The US imposes 50% tariffs on certain Indian goods, creating tension in trade relations.
November 2022: Sergio Gor is sworn in as the US ambassador to India.
October 2023: Ambassador Gor's visit to Delhi and remarks on the importance of the US-India relationship, along with the scheduling of a call to discuss trade negotiations.

What’s new vs what’s known

New today/this week

Ambassador Gor's recent comments affirm the US commitment to advancing trade negotiations, despite the backdrop of disagreements over tariffs and India's oil purchases. The upcoming call signifies an ongoing effort to resolve these issues.

What was already established

Prior to Gor's comments, trade negotiations have faced challenges primarily due to the imposition of tariffs by the US and India's refusal to agree to greater access for US agricultural products. These longstanding sticking points have complicated the path to a comprehensive trade deal.

Impact for the UK

Consumers and households

The impact of US-India trade negotiations on UK consumers is indirect but significant. Trade agreements between these two major economies could influence global supply chains, affecting prices for goods and services in the UK. For instance, any shifts in tariffs or trade policies may alter the dynamics of international trade, potentially leading to changes in import costs.

Businesses and jobs

UK businesses that engage in trade with either the US or India could face repercussions depending on the outcome of these negotiations. Enhanced US-India ties may create opportunities for UK firms to enter new markets or benefit from increased investment. Conversely, any escalation in tariffs could disrupt existing supply chains.

Policy and regulation

UK policymakers will need to monitor the evolving US-India trade discussions closely, as changes may affect trade regulations and economic policies. Increased tariffs or sanctions on Indian goods could lead to a reassessment of trade strategies in the UK, especially considering the interconnected nature of global markets.

Numbers that matter

50%: The tariff imposed by the US on certain Indian goods, the highest in Asia.
2022: The year India became a significant market for Russian oil post-invasion of Ukraine.
10%: Percentage of India's oil purchases that have reportedly decreased since the tariffs were imposed.

Definitions and jargon buster

Tariff: A tax imposed by a government on imported goods, which can affect prices and trade dynamics.
Counterterrorism: Measures taken to prevent and respond to acts of terrorism.

How to think about the next steps

Near term (0–4 weeks)

In the immediate future, the scheduled call on trade negotiations will be a critical indicator of progress. Observers should look for statements from both sides following this meeting to gauge the direction of the discussions.

Medium term (1–6 months)

Over the coming months, the geopolitical landscape may shift, especially concerning India's purchasing decisions in light of US sanctions on Russian oil. The outcomes of these negotiations will likely impact broader trade agreements and relations.

Signals to watch

Statements from US and Indian officials regarding the progress of the trade negotiations.
Changes in tariff policies or sanctions related to India’s oil purchases.
Market responses to any new developments in US-India relations.

Practical guidance

Do

Stay informed about developments in US-India trade negotiations as they can impact global markets.
Monitor changes in tariffs, especially if you are engaged in import/export businesses.

Don’t

Ignore the potential ripple effects of US-India negotiations on UK markets.
Assume that current trade dynamics will remain static; be prepared for changes.

Checklist

Check for updates on the scheduled trade call and subsequent announcements.
Review import/export contracts for potential impacts from changing tariffs.
Engage with industry groups to understand how these negotiations may affect your sector.

Risks, caveats, and uncertainties

While the trade negotiations between the US and India are ongoing, there are significant uncertainties. The categorisation of discussions by US officials may not accurately reflect the complexities involved. As negotiations continue, shifts in policy or unexpected geopolitical events could alter the landscape suddenly. Additionally, the broader implications of India's ongoing relationship with Russia remain a point of contention that could complicate matters further.

Bottom line

The US-India trade negotiations are at a critical juncture, with the potential to reshape economic ties between two major nations. As both sides continue to engage, the outcomes will have lasting implications not just for India and the US but for the global economy, including the UK. Stakeholders should remain vigilant for updates and prepare for possible changes in trade dynamics.

FAQs

What is the current status of the US-India trade negotiations?

The US-India trade negotiations are ongoing, with a scheduled call to discuss the deal, reflecting both nations' commitment to enhancing their economic ties.

What impact do US tariffs have on India?

The 50% tariffs imposed by the US on Indian goods have strained trade relations, creating challenges for Indian exporters and complicating negotiations for a trade deal.

How does the US-India trade deal affect the UK?

While indirect, the US-India trade deal could impact global supply chains and prices for UK consumers and businesses engaged in international trade.