India, US close to trade deal that could slash tariffs to 15–16%: Report

India and the United States are nearing the conclusion of a long-pending bilateral trade agreement that could lower tariffs on Indian exports to around 15–16% from the current effective rate of about 50%, Mint reported on Wednesday, citing three people familiar with the matter.

What trade-offs are being discussed?

According to the report, the deal, which could be announced at the ASEAN Summit later this month, may also see India gradually reducing imports of Russian oil in exchange for better trade terms with Washington.

India’s purchases of Russian crude had prompted an additional 25% levy on Indian exports, on top of a reciprocal 25% tariff imposed by the US earlier this year.

Russia currently supplies about 34% of India’s crude imports, while around 10% of India’s oil and gas imports come from the US.

Washington has been pushing for greater market access for agricultural products such as apples, nuts, and genetically modified crops, as well as industrial goods, electric vehicles, wines, and petrochemical products.

India, on the other hand, has sought tariff concessions for labour-intensive exports such as textiles, gems and jewellery, leather goods, and seafood, while resisting cuts on politically sensitive farm and dairy products that support millions of smallholder farmers.

India is likely to consider US requests for greater market access for non-genetically modified (GM) corn and soymeal, while maintaining existing import duties, the report said. The country may raise the quota for non-GM maize imports from the US, currently capped at 0.5 million tonnes annually.

Negotiations are also advancing on allowing imports of non-GM soymeal for both human and livestock consumption, though there has been no decision on US demands to cut tariffs on dairy products, Mint reported.

The proposed deal could also include a mechanism for periodic review of tariff levels and market access, the newspaper said.

The Indian government may allow ethanol imports and informally encourage state-run refiners to diversify crude purchases toward the US, without making a formal announcement, Mint quoted one of the officials as saying.

Commerce Secretary Rajesh Agarwal recently said that India is open to increasing crude and gas imports from the US if prices remain competitive.