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16-04-2025
Bureau Report
NEW DELHI: India has decided to pursue a path of trade liberalization with the United States, India’s trade secretary said on Tuesday, with the two countries signing the terms of reference for the first part of a bilateral trade deal.
India and the US agreed in February to work on the first phase of a trade deal to be concluded late this year, with a view to reaching bilateral trade worth $500 billion by 2030.
“India has decided to go for a path of trade liberalization with the US,” trade secretary Sunil Barthwal told reporters.
The two countries will start virtual discussions on the deal this month, with the next round of in-person talks scheduled for mid-May, added Rajesh Agrawal, an additional secretary in the trade ministry.
Media reported last month that India is open to cutting tariffs on more than half of US imports worth $23 billion in the first phase of a trade deal the two nations are negotiating, the biggest cut in years.
US President Donald Trump on Wednesday announced a 90-day pause on most tariff hikes for major trading partners including India, while raising levies on China, providing temporary relief for Indian exporters.
Although Indian Prime Minister Narendra Modi was among the first leaders to visit Washington and hold talks with Trump after he returned to the White House, the US president has continued to call India a “tariff abuser” and “tariff king”.
During Modi’s US visit in February, the two countries agreed to start talks towards clinching an early trade deal and resolving their standoff on tariffs.
The United States has a trade deficit of $45.6 billion with India.
India has also taken a number of steps to win over Trump including vowing to buy more defence and energy products.
Last month Indian Prime Minister Narendra Modi’s government had decided to let lapse a $23 billion program to incentivize domestic manufacturing, just four years after it launched the effort to woo firms away from China, according to four government officials.
The scheme will not be expanded beyond the 14 pilot sectors and production deadlines will not be extended despite requests from some participating firms, two of the officials said. Some 750 companies, including Apple supplier Foxconn and Indian conglomerate Reliance Industries, signed up to the Production-Linked Initiative scheme, public records show.
Firms were promised cash payouts if they met individual production targets and deadlines. The hope was to raise the share of manufacturing in the economy to 25% by 2025.
Instead, many firms that participated in the program failed to kickstart production, while others that met manufacturing targets found India slow to pay out subsidies, according to government documents and correspondence seen by Reuters.
As of October 2024, participating firms had produced $151.93 billion worth of goods under the program, or 37% of the target that Delhi had set, according to an undated analysis of the program compiled by the commerce ministry. India had issued just $1.73 billion in incentives or under 8% of the allocated funds, the document said.
News of the government’s decision to not extend the plan and specifics about the lag in payouts are being reported by media for the first time.
Modi’s office and the commerce ministry, which oversees the program, did not respond to requests for comment. Since the plan’s introduction, manufacturing’s share of the economy has decreased from 15.4% to 14.3%.
